April, 2020 - OFAC tightens restrictions on Venezuela – General Licence 8F
- Date: 21/04/2020
On 21st April, 2020, OFAC renewed and re-issued General Licence 8, now General Licence 8F. The amended General Licence is a clear escalation of the US sanctions targeting Venezuela, and may be indicative of an increased focus by the US on its Venezuelan sanctions policy.
Background – General Licence 8
On 28th January, 2019, OFAC designated Venezuela’s state owned oil company, Petroleos de Venezuela S.A. (PdVSA), to the Specially Designated Nationals (SDN) list. As a result, US persons are prohibited from engaging in transactions with PdVSA and all entities that are owned 50% or more by PdVSA, absent OFAC’s express authorisation.
General Licence 8 is one of 36 such authorisations. The General Licence authorised US persons to engage in all transactions “ordinarily incident and necessary to the maintenance of operations, contracts, or other agreements” in Venezuela involving PdVSA or its subsidiaries for Chevron, Halliburton, Schlumberger, Baker Hughes and Weatherford International, all US entities.
General Licence 8F
The amended General Licence 8F applies to the same US entities as General Licence 8, and has an expiry date of 1st December, 2020.
The amendments to the General Licence appear to narrow the scope of authorised transactions with PdVSA and its subsidiaries. Only those transactions or activities that are ordinarily incident and necessary to the limited maintenance of essential operations, contracts, or other agreements are now permitted.
In addition, the General Licence sets out a number of exceptions to the authorisations. Of particular concern to Members is that the General Licence does not permit the transport or shipping of any Venezuelan-origin petroleum or petroleum products. This may have an impact on pending charters with Chevron for the carriage of product out of Venezuela, and Members should exercise caution with regard to the same.
More information can be found in the article published by Freehill, Hogar & Mahar LLP.