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<a>On October 18, 2023, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued several new and amended Venezuela-related General Licenses (GL) authorizing various transactions that would otherwise be prohibited. These developments occurred in response to a political agreement between Venezuela President Nicolás Maduro</a>’s representatives and the Unitary Platform as a step forward in restoring democracy in Venezuela.  According to the Department of Treasury, this easing is conditional and could be rescinded if commitments are not met. All other sanctions on Venezuela remain in effect.

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<a href="https://ofac.treasury.gov/media/932231/download?inline">General License 44</a> temporarily authorizes all transactions that are related to the oil and gas sector operations in Venezuela that would otherwise be prohibited under the Venezuelan Sanctions Regulations (VSR). GL 44 provides a non-exhaustive list of transactions covered by the authorization, including sale, production, new investment and delivery, including authorizing ordinarily incident and necessary financial transactions with certain blocked Venezuelan banks related to the oil and gas sector. The General License specifically authorizes transactions with Petróleos de Venezuela S.A. (PdVSA) and its 50% or more owned entities (PdVSA Entities) as well as any financial institution blocked pursuant to Executive Order (E.O.) 13850 other than Banco Central de Venezuela or Banco de Venezuela SA Banco Universal.

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GL44 specifically excludes authorization for certain transactions involving entities located in or owned or controlled by a person located in Russia. Other key prohibitions also remain in place. GL 44 authorizes transactions through 12:01 a.m. Eastern Daylight Time, April 18, 2024.

<a href="https://ofac.treasury.gov/media/932226/download?inline">General License 43</a> authorizes all transactions Involving CVG <a>Compania General de Mineria de Venezuela CA</a> (Minerven), as well as its 50% or more owned entities that would otherwise be prohibited under E.O. <a>13850</a>. Minerven is the Venezuelan state-owned gold mining company.

<a href="https://ofac.treasury.gov/media/932241/download?inline">FAQ guidance</a> indicates that the U.S. government does not intend to sanction any person solely for operating in the gold sector of the Venezuelan economy.

<a href="https://ofac.treasury.gov/media/932236/download?inline">General License 45</a> 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 exclusively for the purposes of such repatriation involving Consorcio Venezolano de Industrias Aeronáuticas y Servicios Aéreos, S.A. (Conviasa).

FAQ <a href="https://ofac.treasury.gov/faqs/1137">1137</a> states that for the purposes of GL 45, OFAC considers the term “Western Hemisphere” to mean those countries and areas identified by the Department of State on its website as comprising the Western Hemisphere.

Venezuelan Sovereign Bonds and PdVSA Bonds and Equity

<a href="https://ofac.treasury.gov/media/932211/download?inline">General License 3I</a> and <a href="https://ofac.treasury.gov/media/932221/download?inline">General License 9H</a> remove the secondary market trading bans on purchases of certain Venezuelan sovereign bonds and pre-2017 bonds or equity issued by PdVSA. These are complex and explained in brief below:

<a href="https://ofac.treasury.gov/media/932216/download?inline">General License 5M</a> (GL 5M) authorizes certain transactions related to the Petróleos de Venezuela, S.A. 2020 8.5% Bond on or after January 18, 2024.

FAQ <a href="https://ofac.treasury.gov/faqs/595">595</a> answers a question of what GL 5M authorizes and explains that it continues the delay of the effectiveness of previous authorizations related to the PdVSA 2020 8.5% Bond until January 19, 2024. OFAC issued GL 5 on July 19, 2018, which removed E.O. 13835 as an obstacle to holders of the PdVSA 2020 8.5% Bond gaining access to their collateral. However, this authorization was suspended by GL 5A on October 24, 2019. This means that from October 24, 2019, until January 19, 2024, there is no authorization in effect that authorizes the sale or transfer of CITGO shares in connection with the <a>PdVSA 2020 8.5% Bond</a>. The new GL 5M license effectively extends the prohibition period.

Finally, OFAC also published a related document <a href="https://ofac.treasury.gov/media/932241/download?inline">"Frequently Asked Questions Related to the Suspension of Certain U.S. Sanctions with Respect to Venezuela on October 18, 2023"</a> that answers additional questions.

General licenses allow all U.S. persons to engage in the activity described in the general license without needing to apply for a specific license. However, the Venezuelan Sanctions Regulations are complex. A general license may lift one prohibition against a particular transaction but leave in place other prohibitions against specific parties or actions. The particulars of any transaction involving sanctioned Venezuelan entities should be reviewed carefully, even if a general license is available.

If an aspect of a transaction is still prohibited, parties may apply to OFAC for a specific license.

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2023/10/International-Trade-Update-OFAC-Loosens-Venezuelan-Sanctions.pdf

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Francesca M.S. Guerrero

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Corporate Transactions & Securities

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OFAC Loosens Venezuelan Sanctions: Authorizes Transactions Involving Oil and Gas, State-Owned Gold Mining Company, and Certain Debt and Equity of Venezuela and PdVSA