On April 17, 2024, OFAC formally rolled back the sanctions relief it previously provided to the Venezuelan oil and gas industry.  While OFAC provided the initial relief believing that Venezuela would permit a fair and open election, it appears that the Maduro regime has fallen short of its commitments.  As such, and as part of its agreement with the beleaguered South American nation, OFAC has lifted its most significant element of the sanctions relief. 

To effectuate this rollback, OFAC has replaced General License 44 with a new General License 44A.  This new license completely removes the authorization of the prior license—meaning, the Venezuelan oil and gas industry is now, once again, off limits.  Any new transactions in this industry will be considered a violation of sanctions.  OFAC also provided a corresponding FAQ document to provide some additional guidance. 

General License 44A does, however, include a wind down period for any transactions that are currently in progress.  Any transactions that are “ordinarily incident and necessary” to wind down these transactions are authorized through 12:01am eastern daylight time May 31, 2024.  The ordinarily incident and necessary language is somewhat broad and will allow for a variety of measures as needed.  This may mean that you’re able to process a refund through a U.S. institution.  Or, if goods are already in transit, it will allow you to unload the ship at its destination in Venezuela, provided the entire transaction is complete by the end of the wind down period. 

Any transactions that are not completed by this wind down period must be frozen and would then require a specific license from OFAC to complete.  As an example, if the goods have already been shipped and delivered, but you have not yet received payment from PdVSA by the end of the wind down period, then you must request and receive a specific license prior to accepting any funds. 

This roll back of sanctions relief follows a partial rollback earlier this year.  In February, OFAC rolled back its sanctions relief on the Venezuelan gold industry.  While OFAC had initially issued General License 43 that permitted transactions with CVG Minerven in October 2023, General License 43A, published in January 2024, superceded those permissions and instead reinstated the prohibitions on CVG Minerven following a short wind down period. 

As you can see, business in Venezuela is still fraught with sanctions risks as the regulations continuously change depending on the Venezuelan Government’s adherence and compliance with its agreements.  We expect that the situation will continue to evolve as time progresses.  If you are considering doing business in Venezuela, please be cognizant of the continuing risks (not just sanctions-related) and stay up to date with all of the latest changes in the laws and regulations.   

Matt Stankiewicz, Partner, and Daniela Melendez, Associate, provide the latest updates on the Venezuela Sanctions Program. Matt can be reached at [email protected] and Daniela can be reached at [email protected].