By: Ignacio E. Sanchez and Melanie Garcia
The United States government has issued new sanctions in response to the growing unrest in Venezuela. On January 23, the United States recognized Juan Guaido as the new interim President of Venezuela. Nonetheless, Nicolas Maduro has refused to step down. US Secretary of State Mike Pompeo stated that the latest US sanctions related to Venezuela’s state producer of oil are meant to “preserve the core pillar of Venezuela’s national assets for the people and a democratically elected government.”
On January 28, 2019, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Petróleos de Venezuela S.A. (PdVSA) as a Specially Designated National (SDN). With this designation, US persons, including US entities, their foreign branches and US citizens or permanent residents located anywhere in the world, are now prohibited from engaging in any transactions with PdVSA or any entity owned 50 percent or more by PdVSA, unless otherwise authorized. This designation has wide-ranging impacts, as PdVSA owns or is part of joint ventures around the world, including several within the United States.
OFAC has sought to limit these potential wide-ranging impacts on US persons by concurrently issuing a series of General Licenses authorizing US persons to engage in certain transactions with PdVSA and/or certain of its 50 percent or more owned subsidiaries. These General Licenses, described further below, create a complex web of limited authorizations for US persons with various expiration dates.
Whether a General License authorizes a particular transaction is highly dependent on the specific facts and circumstances of that transaction. These summaries should not serve as a substitute for a review of the language and requirements of the actual General Licenses.
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