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Recent Developments Affecting the Energy Sector from the Office of Foreign Assets Control

By Dan Pickard and Jacob A. Garten, Buchanan Ingersoll & Rooney

On October 18, 2023, the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury suspended certain sanctions on Venezuela’s oil and gas sector operations in addition to other sanctions on the gold sector and U.S. person purchases of certain Venezuela sovereign bonds and equity in the secondary market. OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals.

The suspension of certain sanctions measures on Venezuela’s oil and gas sector operations was in response to the agreement between representatives of Nicolás Maduro, the current president of Venezuela, and the Unitary Platform, a Venezuelan political opposition coalition. The United States has long had concerns regarding Venezuelan narcotics trafficking, Venezuela’s lack of cooperation in combatting terrorism and human rights abuses by the Venezuelan government. The sanctions were suspended as part of the United States’ longstanding policy to support the peaceful restoration of democracy, competitive elections, and respect for the rights and freedoms of the Venezuelan people.

OFAC announced the terms of the October 18, 2023 suspension in its General License No. 44. The general license allows various transactions prohibited by the Venezuela Sanctions Regulations from the publication of the general license through 12:01 a.m. eastern daylight time, April 18, 2024. The transactions allowed during this time period include: (1) the production, lifting, sale and exportation of oil or gas; (2) the payment of invoices for goods or services related to oil or gas sector operations; (3) new investment in oil or gas sector operations; and (4) the delivery of oil and gas from Venezuela to creditors of the government of Venezuela, including creditors of Petróleos de Venezuela, S.A. or certain affiliated entities.

Actions not authorized by the general license include: (1) any transactions involving financial institutions blocked pursuant to Executive Order (“E.O.”) 13850 other than Banco Central de Venezuela or Banco de Venezuela SA Banco Universal; (2) transactions involving Venezuelan entities associated with entities located in the Russian Federation; (3) transactions involving persons located in the Russian Federation and entities such persons control; (4) Certain transactions prohibited by E.O. 13808; (5) Any transactions prohibited by E.O. 13827 or E.O. 13835; or (6) the unblocking of any property blocked pursuant to the Venezuela Sanctions Regulations.

OFAC has suspended these sanctions measures only until April 18, 2024. The United States may also reverse these steps prior to then if the Venezuelan government does not take certain agreed upon steps. However, during this six-month window, many otherwise prohibited transactions will be allowed in the Venezuelan oil and gas sectors.

Energy Workforce Member Buchanan, Ingersoll & Rooney provides insights on international trade issues specific to energy services and technology companies. Daniel Pickard is Chair, International Trade & National Security Practice Group, and Jacob A. Garten is Section Specialist, International Trade & National Security Practice Group.


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