U.S. Renews Additional Sanctions on Venezuelan Oil and Gas Sector

Washington, D.C. (May 7, 2024) – On April 17, 2024, the U.S. government renewed sanctions on the Venezuelan oil and gas sector, following a determination by the U.S. State Department that the Maduro Government had “not fully met the commitments” of a political agreement with the Unitary Platform. This action follows earlier reimpositions of Venezuela-related sanctions that had been temporarily lifted in October, subject to the success of this agreement (see our previous alerts, U.S. Suspends Select Venezuela Sanctions Following Political Agreement and OFAC Narrows Venezuela-Related Sanctions General License).

Accompanying the State Department’s determination, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License (GL) 44A, replacing previous GL 44, and an updated guidance document, “Frequently Asked Questions Related to the Suspension of Certain U.S. Sanctions with Respect to Venezuela on October 18, 2023.”

GL 44A replaces and supersedes the authorizations of GL 44. Previously, GL 44 had authorized, among other things, (1) the production, lifting, sale, and exportation (and provision of related goods and services) of oil or gas from Venezuela; (2) the payment of invoices for goods or services related to oil or gas sector operations in Venezuela; and (3) the delivery of oil and gas from Venezuela to creditors of the Government of Venezuela, including creditors of entities in which Petróleos de Venezuela, S.A. (PdVSA) owns, directly or indirectly, a 50 percent or greater interest, for the purpose of debt repayment. Following the issuance of GL 44A, the authorizations of GL 44 are no longer in place. However, through 12:01 a.m. Eastern Daylight Time May 31, 2024, affected persons are authorized to carry out the transactions that are ordinarily incident and necessary to the wind-down of any such transactions.

The updated guidance document, also issued on April 17, 2024, outlines the contours of GL 44A and notes that “[e]ntering into new business, including new investment, that was previously authorized under GL 44 will not be considered wind-down activity.” The document further encourages affected persons to seek guidance from OFAC, should they be unable to meet the May 31, 2024, deadline. In addition, OFAC indicated that, “[f]or persons seeking to engage in transactions and activities previously authorized by GL 44, OFAC will consider specific license requests on a case-by-case basis” and that other authorizations, such as GL 8M and GL 4, are unaffected by the revocation of GL 44.

Lewis Brisbois’s attorneys are actively engaged in the wide range of legal issues in this area and are advising clients on managing legal and business risk as events continue to develop at an accelerated pace. For more information, contact the author or editor of this alert. Visit our Ukraine Conflict Response Practice page for additional alerts in this area.

Author:

George Leahy, Associate

Editor:

Andrew Pidgirsky, Partner & Chair of Ukraine Conflict Response Practice