Trade and Manufacturing Monitor News and insight from our international trade practice group Wed, 03 Jul 2024 03:46:58 -0400 60 hourly 1 U.S. Treasury Lifts Sanctions on Nynas AB Wed, 13 May 2020 10:17:34 -0400 On May 12, 2020, the U.S. Treasury’s Office of Foreign Assets Control (“OFAC”) announced that U.S. persons no longer need OFAC authorization to engage in dealings with Nynas AB, provided such activities do not involve blocked persons or otherwise prohibited activities. Further, Nynas AB is no longer subject to U.S. blocking sanctions as the entity has restructured and is no longer majority-owned by a sanctioned party.

Below are the specific changes:

  • OFAC revoked General License (GL) 13E, “Authorizing Certain Activities Involving Nynas AB,” as it is no longer needed.
  • OFAC issued GL 3H (“Authorizing Transactions Related to, Provision of Financing for, and Other Dealings in Certain Bonds”), which replaces and supersedes GL 3G. The only change was to remove Nynas AB, which was previously excepted from the GL’s authorization. The GL continues to have restrictions on bonds issued by PDV Holding, Inc. and CITGO.
  • OFAC similarly issued GL 9G (“Authorizing Transactions Related to Dealings in Certain Securities”), replacing and superseding GL 9F, to remove the reference to Nynas AB, meaning that the authorization applies to Nynas AB-issued securities that otherwise meet the criteria set forth in the GL. The GL continues to have restrictions on securities issued by PDV Holding, Inc. and CITGO.
OFAC emphasizes that absent agency authorization, U.S. persons continue to be prohibited from engaging in activities with Petróleos de Venezuela, S.A. (PdVSA), or entities in which PdVSA owns, directly or indirectly, a 50 percent or greater interest.

Implications for Suppliers - Chevron Ordered to Wind Down Venezuela Business By December 1, 2020 (with Limited Wind-Down Activities) Wed, 22 Apr 2020 17:18:10 -0400 On April 22, 2020, President Trump ordered Chevron to "wind down" its business in Venezuela by December 1, 2020. This will have a significant impact on companies that supply Chevron with equipment used for oil and gas projects in Venezuela that were previously licensed.

Effective April 21, 2020, the Department of Treasury’s Office of Foreign Assets Control (OFAC) issued General License (GL) 8F, which, significantly limits the activities in which Chevron and other covered entities are authorized to engage while winding down their operations through December 1, 2020.

Chevron is the only covered entity significantly impacted by the new GL 8F as it is the last major U.S. oil company permitted under an OFAC general license to do business in Venezuela. Companies that supply or otherwise do business with Chevron related to Venezuela should immediately review this significantly limited GL 8F carefully to determine whether their existing and planned business would be authorized pursuant to the new GL or whether they may need to alter their plans, review force majeure clauses, apply for a specific OFAC license or other authorization from OFAC, or take other steps.

Specifically, GL 8F authorizes Chevron, and other covered entities, to engage in certain transactions and activities, otherwise prohibited by the Venezuela Sanctions Regulations (VSR), that are ordinarily incident and necessary to the limited maintenance of essential operations, contracts, or other agreements. However, these wind-down transactions/activities must now be for the preservation of assets or safety in Venezuela, involve PdVSA or any entity in which they own 50% or greater interest, and have been in effect prior to July 26, 2019.

Additionally, regarding Chevron and the other covered entities, GL 8F no longer authorizes:

  • The drilling, lifting, or processing of, purchase or sale of, or transport, or shipping of any Venezuelan-origin petroleum or petroleum products;
  • The provision or receipt of insurance or reinsurance regarding the above activities;
  • The design, construction, installation, improvement, or repair of any wells, facilities, or other infrastructure in Venezuela or the purchasing or provision of any goods or services, except as required for safety;
  • Contracting for additional services or personnel, except as required for safety;
  • The payment of any dividend, including in kind, to PdVSA, or any entity in which PdVSA owns, directly or indirectly, a 50% or greater interest; or
  • Any loans to, accrual of additional debt by, or subsidization of PdVSA, or any entity in which PdVSA owns, directly or indirectly, a 50% or greater interest, including in kind, as prohibited by Venezuelan Sanctions Regulations.

U.S. Proposes Framework for Transition and Lifting of Venezuela Sanctions Tue, 31 Mar 2020 10:35:40 -0400 Elliott Abrams, the U.S. Special Representative for Venezuela, announced a plan to lift sanctions on Venezuela should the Maduro regime step aside to permit a transitional government to be elected until full elections can take place in late 2020.[1] If there is transition of power, individual sanctions on dozens of Venezuelan government officials could be lifted as soon as they give up their positions under the transition. Additionally, broader economic sanctions on Venezuela’s oil sector and state-owned oil company Petróleos de Venezuela (PDVSA), would be lifted, but only after Maduro steps down and all “foreign security forces”, including those from Cuba and Russia, are withdrawn.” The details are set to be announced today, March 31, 2020.[2]

In order for the framework for transition of power to be successful, there would need to be a power-sharing between the Guaido-led opposition and Socialist lawmakers, who would have to turn on Maduro. The proposal would not provide for relief from criminal indictments against Maduro and alleged accomplices, and the plan also calls for the creation of a Truth and Reconciliation Commission. The U.S. government believes offering sanctions relief may create an opportunity for transition since Venezuela is currently under immense pressure due to U.S. sanctions, lowering world oil prices, and the coronavirus pandemic.