The US introduces Venezuela sanctions relief
On 18 October 2023, OFAC issued three new general licenses and amended three existing general licenses related to Venezuela in response to the signing of an electoral roadmap agreement between the Venezuela Unitary Platform and the Maduro regime. These actions by the US introduces, among other things, a sanctions relief for the Venezuelan oil and gas sector and gold sector in support of the Venezuelan people. OFAC also published related FAQs.
OFAC's press release can be found on their website, as can the general licenses and FAQs. The press statement of Secretary of State Antony Blinken can similarly be found on the Department of State's website.
In this Sanctions Alert, we provide an update of the content of the US sanctions relief with respect to Venezuela.
General License 3I – Government-issued bonds
General License 3I (which amends General License 3H) authorizes all transactions related to, the provision of financing for, and other dealings in bonds specified in the Annex to GL 3I ("GL 3I Bonds"), which is otherwise prohibited by Section 1(a)(iii) of Executive Order 13808 (as amended by Executive Order 13857) or Executive Order 13850 (as amended by Executive Order 13884). Section 1(a)(iii) of Executive Order 13808 prohibits US persons from dealing with bonds issued by the Government of Venezuela prior to 25 August 2017. Further, Executive Order 13884 blocks the property and interest in property of the Government of Venezuela.
The authorization in General License 3I also allows US persons to divest or transfer, or facilitate such divestment or transfer, any holdings in GL 3I Bonds to a US person.
General License 3M – PdVSA 8.5 Percent Bonds
General License 3M (which amends General License 5L) authorizes, on or after 18 January 2024, all transactions related to, the provision of financing for, and other dealings in the Petróleos de Venezuela, S.A. ("PdVSA") 2020 8.5 Percent Bonds otherwise prohibited by Section 1(a)(iii) of Executive Order 13858 (as amended by Executive Order 13857).
General License 9H – PdVSA securities
General License 9H (which amends General License 9G) authorizes all transactions and activities otherwise prohibited by Section 1(a)(iii) of Executive Order 13808 (as amended by Executive Order 13857) or Executive Order 13850 (as amended by Executive Order 13884) that are ordinarily incident and necessary to dealings in any debt of, or any equity in, PdVSA, including entities owned 50% or more by PdVSA ("PdVSA Securities").The authorization also allows US persons to divest or transfer, or facilitate such divestment or transfer, any holdings in PdVSA Securities to a US person.
General License 43 – State-owned gold company Minerven
General License 43 authorizes all transactions involving the Venezuelan state-owned gold company CVG Compania General de Mineria de Venezuela CA ("Minerven"), including any entities owned 50% or more by Minerven.
General License 44 – oil and gas sector operations
General License 44 authorizes all transactions related to oil or gas sector operations in Venezuela until 18 April 2024, including transactions involving PdVSA and entities owned 50% or more by PdVSA ("PdVSA Entities"). The authorized transactions include:
- Production, lifting, sale, and exportation of oil or gas from Venezuela, and provision of related goods and services;
- Payment of invoices for goods or services related to oil or gas sector operations in Venezuela;
- New investment in oil or gas operations in Venezuela; and
- 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.
Though General License 44 provides a broad relief to the oil and gas sector operations in Venezuela, certain prohibitions remain in place, as stated in the General License and reiterated in FAQ no 2 of the related FAQ document issued by OFAC. Key prohibitions still in place include:
- Designated financial institutions: The General License does not authorize transactions involving financial institutions blocked under Executive Order 13850 other than Banco Central de Venezuela or Banco de Venezuela SA Banco Universal
- Russia-related operations: The General License does not authorize the provision of goods or services to, or new investment in, an entity located in Venezuela that is owned or controlled by, or a joint venture with, an entity located in Russia. Further, it does not authorize transactions related to new investment in oil or gas sector operations in Venezuela by a person located in Russia or any entity owned or controlled by a person located in Russia;
- Financial restrictions in Executive Order 13808: The General License does not authorize new debt transactions, such as the provision of loans to PdVSA, that are not for the payment of invoices or repayment of debt through delivery of oil or gas;
- Transactions prohibited by Executive Order 13827 and Executive Order 13835: The General License does not authorize any transactions prohibited by Executive Order 13827 (related to certain virtual assets issued by, for, or on behalf of the Government of Venezuela) or Executive Order 13835 (related to debt that is owed to the Government of Venezuela);
- Blocked property: The General License does not authorize the unblocking of any property blocked under the Venezuela Sanctions Regulations, unless specifically authorized;
- Blocked persons: The General License does not authorize transactions involving persons blocked pursuant to a sanctions authority other than the Venezuela Sanctions Regulations.
General License 45 – Repatriation transactions
General License 45 authorizes all transactions ordinarily incident and necessary to the repatriation of Venezuelan nationals from non-U.S. jurisdictions in the Western Hemisphere to Venezuela, and which are exclusively for the purpose of such repatriation. The authorization also includes transactions with the blocked entity Consorcio Venezolano de Industrias Aeronáuticas y Servicios Aéreos, S.A. ("Conviasa"), including entities owned 50% or more by Conviasa.
In addition to the General Licenses, OFAC issued two new Venezuela-related FAQs (FAQs no 1136 and 1137), amended four Venezuela-related FAQs (FAQs no 595, 661, 662 and 629) and published a related FAQ document: Frequently Asked Questions Related to the Suspension of Certain U.S. Sanctions with Respect to Venezuela on October 18, 2023.
Expectations by the US
The US has also conveyed its understanding of steps Venezuela will take by the end of November. According to the press statement by the Department of State, the following steps are expected:
- Define a specific timeline and process for the expedited reinstatement of all candidates. All who want to run for President should be allowed the opportunity, and are entitled to a level electoral playing field, to freedom of movement, and to assurances for their physical safety;
- Begin to release all wrongfully detained US nationals and Venezuelan political prisoners.
If the expectations are not met, OFAC may reverse the sanctions relief introduced in the General Licenses. On the other hand, if representatives of the Maduro regime follow through with their commitments and take continued concrete steps toward a democratic election by the end of 2024, General License 44, valid for six months, may be renewed and extended.
WR Sanctions Alerts provide you with updates on material developments in the country-specific sanctions programmes implemented by the US, the UN, the UK, the EU and Norway. We will not provide updates on mere prolongations, without material changes, of existing sanctions programmes, nor on any listings or de-listings of individuals/entities placed on implemented sanctions lists. Please note that the WR Sanctions Alerts are provided as general information and do not constitute legal advice.