On November 26, 2022, the US Department of the Treasury’s Office of Foreign Assets Controls (“OFAC”) issued General License 41 (“GL 41“) authorizing Chevron Corporation (“Chevron”) to resume limited oil extraction operations in Venezuela and accompanying FAQs. According to the accompanying press release, OFAC issued GL 41 after Unitary Platform and President Maduro’s regime announced the resumption of negotiations; a humanitarian agreement focused on education, health, food security, flood response, and electricity programs that will benefit the Venezuelan people; and agreement on the continuation of talks focused on the 2024 elections. OFAC also issued an updated General License 8K (“GL 8K“) extending certain limited wind-down activities with Petróleos de Venezuela, S.A. (“PdVSA”) until May 25, 2023.
New GL 41 and Related FAQs
GL 41 authorizes transactions ordinarily incident and necessary to certain activities related to the operation and management by Chevron Corporation or its subsidiaries of its joint ventures in Venezuela (“Chevron JVs”) involving PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50% or greater interest. Such activities include, among others:
- Production and lifting of petroleum or petroleum products produced by Chevron JVs and related maintenance, repair, or servicing of the Chevron JVs;
- Sales, exports from, or imports into the United States of petroleum or petroleum products produced by the Chevron JVs provided such products are first sold to Chevron;
- Ensuring the health or safety of personnel or the integrity of operations or assets of the Chevron JVs in Venezuela; and
- Purchases and imports into Venezuela of goods or inputs related to the above activities, including diluents, condensates, petroleum, or natural gas products provided such goods or services are not of Iranian origin.
While GL 41 signals an opening for other companies to resume oil extraction activities in Venezuela, it is important to note Venezuela-related sanctions and restrictions imposed by the United States remain in place and GL 41 does not authorize:
- Payments of taxes or royalties to the Government of Venezuela.
- Payment of any dividends, including a dividend in kind, to PdVSA, or any entity in which PdVSA owns, directly or indirectly, a 50% or greater interest.
- The sale of petroleum or petroleum products produced by or through the Chevron JVs for the exportation to any jurisdiction other than the United States.
- Any transaction involving an entity located in Venezuela that is owned or controlled by an entity located in the Russian Federation.
- Any expansion of the Chevron JVs into new fields in Venezuela beyond what was in place on January 28, 2019.
- Any transactions involving any person blocked pursuant to the Venezuela Sanctions Regulations other than the blocked persons authorized under GL 41 or other OFAC authorizations.
Concurrent with the issuance of Venezuela GL 41, OFAC also issued public guidance indicating that US persons, including financial institutions, are authorized to provide goods and services for certain activities as specified in GL 41 and that non-US persons generally do not risk US sanctions exposure for facilitating transactions that are authorized by GL 41.
GL 41 will automatically renew on the first day of each month and is valid for a period of six months from November 26, 2023 or the date of any subsequent renewal, whichever is later.
Updated GL 8K
In addition to issuing GL 41, OFAC also issued GL 8K which extends the validity period of the authorization for certain transactions and activities otherwise prohibited by Executive Order (“EO”) 13850 (as amended by EO 13857) or EO 13884 that are ordinarily incident and necessary to the limited maintenance of essential operations, contracts, or other agreements that are (i) for the safety or the preservation of assets in Venezuela, (ii) involve PdVSA or its 50%-or-more owned subsidiaries, and (iii) were in effect prior to July 26, 2019 for the following entities and their subsidiaries: Halliburton; Schlumberger Limited; Baker Hughes; and Weatherford International (“Covered Entities”). GL 8K also extends the validity period of the authorization to wind-down PdVSA-related activities involving Covered Entities, effectively providing US companies an additional six months to exit the market. In light of Venezuela GL 41, OFAC also removed Chevron from the list of Covered Entities. Beyond the extension of the validity period and removal of Chevron, no additional changes were made to the license.