In recent years, relations between the United States of America (USA) and Venezuela have been marked by political and economic disputes.
However, last Wednesday (10.18.2023), OFAC (Office of Foreign Assets Control, U.S. Department of the Treasury) issued five licenses temporarily easing some current sanctions on Venezuelan oil, gas and gold, and one license to facilitate the repatriation of Venezuelan citizens.
The temporary measure is subject to the compliance with an agreement between the Venezuelan government and the opposition to hold free and transparent elections in the country in 2024.
Below is a brief summary of the new conditions:
● Two licenses authorize transactions related to the oil and gas sector in Venezuela, as well as the trading of certain securities of Petroleos de Venezuela S.A. (PdVSA) or any entity in which PdVSA holds an interest equal to or greater than 50% (General Licenses No. 44 and No. 9H);
● A license authorizes transactions related to a specific 2020 security of PdVSA (General License No. 5M);
● A license authorizes Venezuelan state-owned CVG Compania General de Minería de Venezuela C.A. (Minerven) to transact with the US, which justified the measure as a way to "reduce the informal gold trade" (General License No. 43);
● OFAC now allows the sale, transfer or facilitation of the sale or transfer of any securities to a US person (General License No. 3I), as well as the holding of all transactions normally incident and necessary for the repatriation of Venezuelan citizens from non-US jurisdictions in the Western Hemisphere to Venezuela, and which are intended exclusively for such repatriation, involving Consorcio Venezolano de Industrias Aeronauticas y Servicios Aereos, S.A. (Conviasa), or any entity in which Conviasa holds, directly or indirectly, an interest equal to or greater than 50% (General License No. 45).
For further reference, see below the full texts of the abovementioned licenses.
Please note that this section is for information purposes only, and should not be understood or interpreted for any purpose as Cescon Barrieu’s legal opinion on foreign law. Furthermore, each practical case must be analyzed individually.
GENERAL LICENSE NO. 44 AND NO. 9H: Authorizing Transactions Related to Oil or Gas Sector Operations in Venezuela and Authorizing Transactions Related to Dealings in Certain Securities
In brief summary, these licenses authorize transactions related to the oil and gas sector in Venezuela, as well as the trading of certain securities of Petroleos de Venezuela S.A. (PdVSA) or any entity in which PdVSA holds an interest equal to or greater than 50%.
General License No. 44
(a) Except as provided for in paragraph (b) of this general license, all transactions prohibited by the Venezuelan Sanctions Regulations, 31 CFR part 591 (the VSR), including transactions involving Petroleos de Venezuela, S.A. (PdVSA) or any entity in which PdVSA holds, directly or indirectly, an interest equal to or greater than 50% (collectively, "PdVSA Entities"), that relate to transactions in the oil or gas sector in Venezuela are authorized until 12:01 a.m. U.S. Eastern Daylight Time on April 18, 2024, including:
(1) Producing, lifting, selling and exporting oil or gas from Venezuela, and providing related goods and services;
(2) Payment of invoices for goods or services related to transactions in the oil or gas sector in Venezuela;
(3) New investments in oil or gas transactions in Venezuela; and
(4) Delivery of Venezuelan oil and gas to creditors of the Government of Venezuela, including creditors of the PdVSA Entities for the purpose of paying debts.
(b) This general license does not authorize:
(1) Any transaction involving any financial institution blocked pursuant to Executive Order (E.O.) 13,850, except for the Central Bank of Venezuela or Banco de Venezuela SA Banco Universal;
(2) The provision of goods or services to, or new investments in, an entity located in Venezuela that is owned or controlled by, or a joint venture with, an entity located in the Russian Federation;
(3) Any transactions related to new investments in transactions in the oil or gas sector in Venezuela by a person located in the Russian Federation or any entity owned or controlled by a person located in the Russian Federation;
(4) Any transactions prohibited by subsections I(a)(i)-(iii) or I(b) of E.O. 13,808, except for the transactions described in paragraphs (a)(2) and (a)(4) of this general license;
(5) Any transactions prohibited by E.O. 13,827 or E.O. 13,835; or
(6) The unblocking of any property blocked on the basis of the VSR.
General License No. 9H
(a) Except as provided for in paragraphs (f) and (g) of this general license, all transactions and activities prohibited by Subitem 1(a)(iii) of Executive Order (E.O.) 13,808 of August 24, 2017, or E.O. 13,850 of November 1, 2018, each as amended by E.O. 13,857 of January 25, 2019, or E.O. 13,884 of August 5, 2019, as collectively incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591 (the VSR), that are ordinarily incident and necessary to dealings in any debt (including the securities listed in the Schedule to this general license, promissory notes and other credits) or any interest in Petroleos de Venezuela, S. A. (PdVSA) or any entity in which PdVSA holds, directly or indirectly, an interest equal to or greater than 50%, issued prior to August 25, 2017 (the effective date of E.O. 13,808) (collectively, "PdVSA Securities"), are authorized, including, as of October 18, 2023, the sale, transfer or facilitation of the sale or transfer of any PdVSA Securities to a United States person.
(b) The transactions and activities authorized in paragraph (a) include facilitating, clearing and settling transactions to sell the PdVSA Securities, including on behalf of U.S. persons.
(c) Except as provided for in paragraph (g) of this general license, all transactions and activities prohibited by Subitem 1(a)(iii) of E.O. 13,808 or E.O. 13,850, each as amended, or E.O. 13,884, as collectively incorporated into the VSR, that are ordinarily incident and required for the facilitation, clearance and settlement of dealings in PdVSA Securities are permitted, provided that such dealings were placed prior to 4:00 p.m., U.S. Eastern Standard Time, on January 28, 2019.
(d) Except as provided for in paragraph (g) of this general license, all transactions and activities prohibited by Subitem 1(a)(iii) of E.O. 13,808 or E.O. 13,850, each as amended, or E.O. 13,884, as collectively incorporated into the VSR, that are ordinarily incident and required for the closing of financial contracts or other agreements entered into prior to 4:00 p.m., U.S. Eastern Standard Time, on January 28, 2019, involving, or in connection with, PdVSA Securities are authorized. This authorization is valid until 12:01 a.m. U.S. Eastern Daylight Time on March 31, 2020.
(e) Except as provided for in paragraph (g) of this general license, all transactions and activities prohibited by Subitem 1(a)(iii) of E.O. 13,808 or E.O. 13,850, each as amended, or E.O. 13,884, as collectively incorporated into the VSR, that are customarily incident to and required for dealings in securities issued prior to August 25, 2017 (the effective date of E.O. 13,808) by the following entities or any of their subsidiaries are authorized:
• PDV Holdings, Inc.
• CITGO Holdings, Inc.
(f) Paragraph (a) of this general license does not authorize U.S. persons to sell or facilitate the sale of PdVSA Securities to, directly or indirectly, any person whose property and interests in property are seized pursuant to the VSR.
(g) This general license does not authorize:
(1) The release of any property seized pursuant to the VSR, or any other part of 31 CFR Chapter V, except as authorized in paragraphs (a), (c), (d), and (e);
(2) Any transactions or activities otherwise prohibited by the VSR, or any other part of Chapter V of 31 CFR, or any transactions or activities with any blocked persons other than transactions or activities involving the Government of Venezuela, including the Central Bank of Venezuela, PdVSA, or any entity in which PdVSA holds, directly or indirectly, an interest equal to or greater than 50%, as described in this general license.
(h) As of October 18, 2023, General License No. 9G, dated May 12, 2020, is replaced and revoked in its entirety by this General License No. 9H.
GENERAL LICENSE NO. 5M: Authorizing Certain Transactions Related to the Petroleos de Venezuela, S.A. 2020 8.5 Percent Bond on or After January 18, 2024
In a brief summary, through General License No. 5M, transactions and other deals involving the "2020 8.5 Percent Bond" of PdVSA have been authorized.
(a) Except as provided for in paragraph (b) of this general license, as of January 18, 2024, all transactions related to the financing and other negotiations of the "2020 8.5 Percent Bond" of Petroleos de Venezuela, S.A. that would be prohibited by subsection I(a)(iii) of Executive Order (E.O.) 13,835 of May 21, 2018, as amended by E.O. 13,857 of January 25, 2019 and incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591 (VSR), are authorized.
(b) This general license does not authorize transactions or activities otherwise prohibited by the VSR or any other part of Chapter V of 31 CFR.
(c) As of October 18, 2023, General License No. 5L, dated July 19, 2023, is replaced and revoked in its entirety by this General License No. 5M.
GENERAL LICENSE NO. 43: Authorizing Transactions Involving CVG Compania General de Mineria de Venezuela C.A.
In brief summary, the Venezuelan state-owned CVG Compania General de Minería de Venezuela C.A. (Minerven) was authorized to trade with the US, which justified the measure as a way to "reduce the informal gold trade".
(a) Except as provided for in paragraph (b) of this general license, all transactions involving CVG Compania General de Minería de Venezuela C.A. (Minerven) or any entity in which Minerven holds, directly or indirectly, an interest equal to or greater than 50%, that are prohibited by Executive Order (E.O.) 13,850, as amended by E.O. 13,857, or E.O. 13,884, each incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591 (the VSR), are authorized.
(b) This general license does not authorize any transaction otherwise prohibited by the VSR, including any transaction involving any person blocked pursuant to the VSR, except the blocked persons described in paragraph (a) of this general license, persons of the Government of Venezuela blocked exclusively pursuant to E.O. 13,884, the Central Bank of Venezuela, or Banco de Venezuela SA Banco Universal.
GENERAL LICENSE NO. 3I: Authorizing Transactions Related to, Provision of Financing for, and Other Dealings in Certain Bonds
In brief summary, OFAC now permits the sale, transfer, or facilitation of the sale or transfer of securities to a U.S. person.
(a) Except as provided for in paragraphs (e) and (f) of this general license, all transactions relating to financing and other dealings in securities specified in the Schedule to this general license (GL 3I Securities) that would otherwise be prohibited by Subitem 1(a)(iii) of Executive Order (E.O.) 13,808 of August 24, 2017 or E.O. 13,850 of November 1, 2018, each as amended by E.O. 13,857 of January 25, 2019, or E.O. 13,884 of August 5, 2019, as collectively incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591 (the VSR), are authorized, including, as of October 18, 2023, the sale, transfer, or facilitation of the sale or transfer of any securities to a U.S. person.
(b) Except as provided for in paragraph (f) of this general license, U.S. persons are authorized to engage in all transactions prohibited by Subitem 1(a)(iii) of E.O. 13,808 or E.O. 13,850, each as amended, or E.O. 13,884, as collectively incorporated into the VSR, that are ordinarily incident and required for the facilitation, clearance and settlement of dealings in GL 3I Securities, provided that such dealings were effected prior to 4:00 p.m., U.S. Eastern Standard Time, on February 1, 2019.
(c) Except as provided for in paragraph (f) of this general license, all transactions and activities prohibited by Subitem 1(a)(iii) of E.O. 13,808 or E.O. 13,850, each as amended, or by E.O. 13,884, as collectively incorporated into the VSR, that are ordinarily incident and required for the closing of financial contracts or other agreements entered into prior to 4:00 p.m., U.S. Eastern Standard Time, on February 1, 2019, involving, or in connection with, GL 3I Securities, are authorized. This authorization is valid until 12:01 a.m. U.S. Eastern Daylight Time on March 31, 2020.
(d) Except as provided for in paragraph (f) of this general license, all transactions relating to the provision of financing and other dealings in securities that were issued (i) prior to August 25, 2017 (the effective date of E.O. 13,808), and (ii) by entities of U.S. persons that are owned or controlled, directly or indirectly, by the Government of Venezuela, except for PDV Holding, Inc. (PDVH), CITGO Holding, Inc. and their subsidiaries, which would be prohibited by E.O. 13,808 or E.O. 13,850, each as amended, or E.O. 13,884, as collectively incorporated into the VSR, are authorized.
(e) Paragraph (a) of this general license does not authorize U.S. persons to sell, or facilitate the sale of, GL 3I Securities to, directly or indirectly, any person whose property and interests in assets are seized pursuant to the VSR.
(f) This general license does not authorize: (1) The release of any assets seized pursuant to the VSR, or any other part of Chapter V of 31 CFR, except as authorized in paragraphs (a), (b), (c), and (d); or (2) Any transactions or activities otherwise prohibited by the VSR, or any other part of Chapter V of 31 CFR, or any transactions or activities with any blocked persons other than transactions or activities involving the Government of Venezuela, including the Central Bank of Venezuela, as described in this general license.
(g) As of October 18, 2023, General License No. 3H, dated May 12, 2020, is replaced and revoked in its entirety by this General License No. 3I.
GENERAL LICENSE NO. 45: Authorizing Certain Repatriation Transactions Involving Consorcio Venezolano de Industrias Aeronauticas y Servicios Aereos, S.A.
In brief summary, OFAC has authorized the performance of all transactions normally incident and required for the repatriation of Venezuelan nationals from non-U.S. jurisdictions in the Western Hemisphere to Venezuela, and which are intended solely for such repatriation, involving Consorcio Venezolano de Industrias Aeronauticas y Servicios Aereos, S.A. (Conviasa), or any entity in which Conviasa holds, directly or indirectly, an interest equal to or greater than 50%.
(a) Except as provided for in paragraph (b) of this general license, all transactions ordinarily incident and required for the repatriation of Venezuelan nationals from jurisdictions outside the United States in the Western Hemisphere to Venezuela, and which are exclusively for such repatriation, involving Consorcio Venezolano de Industrias Aeronauticas y Servicios Aereos, S. A. (Conviasa), or any entity in which Conviasa holds, directly or indirectly, an interest equal to or greater than 50%, which are prohibited by Executive Order (E.O.) 13,850, as amended by E.O. 13,857, or E.O. 13,884, each incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591 (the VSR), are authorized.
(b) This general license does not authorize any transactions otherwise prohibited by the VSR, including any transactions involving any person blocked pursuant to the VSR, except the blocked persons described in paragraph (a) of this general license, persons of the Government of Venezuela blocked exclusively pursuant to E.O. 13,884, Banco Central de Venezuela or Banco de Venezuela SA Banco Universal.
