US Sanctions – Venezuela – 6-month Licence for Oil & Gas Transactions

21 October 2023

Members and Assureds involved in oil and gas trade may already be aware that US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a press release on 18 October 2023 (available here) announcing the issuance of 4 general licences suspending certain sanctions. This includes a six-month General Licence No. 44 (“GL No. 44”) Authorising Transactions Relating to Oil or Gas Sector Operations in Venezuela (available here), which will only be renewed if Venezuela meets its commitments under the electoral roadmap as well as other commitments with respect to those who are wrongfully detained.

OFAC has also issued a related document, Frequently Asked Questions Related to the Suspension of Certain U.S. Sanctions with Respect to Venezuela on October 18 2023, which is available here. FAQ 1 states that the GL No. 44 temporarily authorises “all transactions that are related to oil and gas sector operations in Venezuela, including authorizing ordinarily incident and necessary financial transactions with certain blocked Venezuelan banks related to the oil and gas sector.” FAQ 2 goes into more detail about how GL 44 works, by authorising transactions previously prohibited, “including the sale of oil and gas from Venezuela to the United States and other jurisdictions, as well as the payment of taxes, royalties, costs, fees, dividends, and profits related to oil and gas sector operations or transactions involving PdVSA”. Transactions that are permitted includes “(1) the production, lifting, sale, and exportation of oil or gas from Venezuela, and provision of related goods and services; (2) the payment of invoices for goods or services related to oil or gas sector operations in Venezuela; (3) new investment in oil or gas sector operations in Venezuela; and (4) the delivery of oil and gas from Venezuela to creditors of the Government of Venezuela, including creditors of PdVSA entities, for the purposes of debt repayment.” However, note that certain key prohibitions remain in place: in relation to transactions with a financial institution blocked under E.O. 13850, Russia related operations, financial restrictions under E.O. 13808, transactions prohibited under E.O. 13827 & E.O. 13835, blocked property and blocked persons.

Members and Assureds considering engaging in such trade should carry out careful due diligence and ensure that all such voyages are completed by 12:01am eastern daylight time 18 April 2024 to avoid the risk of being sanctioned. Whilst the FAQs mention an intention to renew GL No. 44, this depends on other events, so Members and Assureds should be careful to ensure that they are not obliged to carry such cargoes after this date.