On April 21, 2020, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) amended General License (“GL”) 8E and re-issued it as General Licence No. 8F. GL 8F extends the validity period of certain maintenance activities involving Petróleos de Venezuela S.A. (“PdVSA”) until December 1, 2020, but also narrows the scope of the prior license and provides a new authorization for “wind-down” transactions and activities. Our blog posts describing previous amendments to the general license are available here, here, and here.
GL 8F 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: Chevron Corporation; Halliburton; Schlumberger Limited; Baker Hughes; and Weatherford International.
While previous iterations of GL 8 referred broadly to the “maintenance” of operations, contracts, and other agreements in Venezuela involving PdVSA or its 50%-or-more owned subsidiaries, the revised GL 8F refers to “limited maintenance” within the narrower scope of the terms and purposes set out above. Correspondingly, a new paragraph (c) to GL 8F now includes a list of activities not authorized by GL 8F, including but not limited to the following:
- 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 with respect to the transactions and activities described immediately above;
- The design, construction, installation, repair, or improvement of any wells or other facilities or infrastructure in Venezuela or the purchasing or provision of any goods or services, except as required for safety;
- Contracting for additional personnel or services, except as required for safety; and
- The payment of any dividend, including in kind, to PdVSA or its 50%-or-more owned subsidiaries.
A new Note included in GL 8F provides guidance that the scope of authorized transactions and activities necessary “for the safety or the preservation of assets in Venezuela” includes transactions and activities necessary to ensure the safety of personnel or the integrity of operations and assets in Venezuela; participation in shareholder and board of directors meetings; payment of local taxes and purchase of utility services; payments of salaries for employees and contractors; and making payments on third-party invoices for transactions authorized by the license, subject to various terms.
Finally, the new “wind-down” provision in paragraph (b) to GL 8F now authorizes transactions and activities otherwise prohibited by EO 13850, as amended, or EO 13884 that are ordinarily incident and necessary to the wind down of operations, contracts, or other agreements in Venezuela involving PdVSA or its 50%-or-more owned subsidiaries, and that were in effect prior to July 26, 2019, subject to certain terms. This is in addition to the “limited maintenance” activities outlined above. The authorizations set out in GL 8F are valid through 12:01 EST on December 1, 2020 (previously, GL 8G was valid through April 22, 2020).