U.S. Suspends Select Venezuela Sanctions Following Political Agreement
Washington, D.C. (November 3, 2023) - On October 18, 2023, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) suspended several Venezuela-related sanctions in response to a political agreement between the Maduro government and the Unitary Platform.
Specifically, OFAC issued General Licenses (“GLs”) that authorize previously prohibited transactions in the Venezuelan oil and gas sector; the Venezuelan gold sector; and U.S. person purchases in the secondary market of Venezuela sovereign bonds and equity. Although these authorizations are significant, various limitations imposed by the Venezuela Sanctions Regulations (“VSR”) remain in place, and OFAC has stressed that it retains the authority to rescind authorizations, should the political agreement fail. A summary of each GL follows below; such authorizations are not universal and may be subject to additional limitations:
• GL 3I allows U.S. persons to deal with specified bonds, including divestment to U.S. persons. However, it does not permit selling bonds to blocked individuals or the unblocking of property.
• GL 5M authorizes transactions related to the Petróleos de Venezuela S.A. (“PdVSA”) 2020 8.5 Percent Bond, starting January 18, 2024.
• GL 9H authorizes certain transactions involving pre-August 25, 2017, debt and equity issued by PdVSA or its majority-owned entities. However, it does not authorize divestment to blocked individuals or the unblocking of property.
• GL 43 authorizes transactions with CVG Compania General de Mineria de Venezuela CA (Minerven), a Venezuelan state-run ferrous metals mining company previously sanctioned for operating in the Venezuelan gold sector.
• GL 44 broadly authorizes transactions in the Venezuelan oil and gas sector, including, but not limited to: (1) the production, lifting, sale, and exportation of oil or gas from Venezuela, and provision of related goods and services; (2) 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) delivery of oil and gas from Venezuela to creditors of the Government of Venezuela, including creditors of PdVSA Entities, for the purpose of debt repayment. However, it does not authorize transactions with certain financial institutions blocked pursuant to E.O. 13850 or transactions with persons or entities located in the Russian Federation, among other limitations.
• GL 45 authorizes transactions for the purpose of repatriating Venezuelan nationals from non-U.S. Western Hemisphere jurisdictions to Venezuela through Conviasa or its associates.
Lewis Brisbois’ experienced attorneys are helping clients navigate rapidly developing, sanction-related legal and business risks. For more information on these developments, contact the authors of this alert. Visit our Ukraine Conflict Response Practice page for similar alerts in this area.
George Leahy - Law Clerk
Andrew Pidgirsky - Partner & Chair of Ukraine Conflict Response Practice
Jane Luxton - Managing Partner, Washington D.C.