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CURRENT STATUS OF THE SANCTIONS IMPOSED BY THE U.S. GOVERNMENT ON THE VENEZUELAN STATE’S OIL SECTOR

Gonzalo Capriles

Gonzalo Capriles
Consultant

 

Our intention is to show an overview of the situation of the oil sector of the Venezuelan economy, in light of the sanctions imposed on that sector by the Government of the United States of America, since 2017.

I. Executive Orders

The sanctions were imposed by the following executive orders, all issued by President Trump in his first presidential term, and subject to various Licenses, General or Specific, by which the Office of Foreign Assets Control (OFAC) allows certain operations.

The Executive Orders by which sanctions were imposed with respect to the oil sector were the following:

– Executive Order 13808, of August 24, 2017, prohibiting the financing of new debt to Petróleos de Venezuela S.A. (PDVSA), the Venezuelan state-owned oil company, with a maturity of more than 90 days. A similar prohibition was imposed on financing to the Government of Venezuela1 for a period of more than 30 days, as well as on commercial transactions with bonds issued by that Government and on payments of dividends or other distributions of profits to the Government of Venezuela, made by entities owned or controlled by that Government, directly or indirectly. This Executive Order also prohibits the purchase, directly or indirectly, of securities of the Government of Venezuela, other than the new debt with a maturity of 30 or 90 days, mentioned above.

– Executive Order 13827, of March 19, 2018, which prohibited all commercial transactions in any currency or token, digital, issued by the Government of Venezuela or in its name. The Government of Venezuela had issued the Petro (“PTR”), a digital currency backed by an oil field, as indicated when announcing that currency.

– Executive Order 13835, of May 21, 2018, prohibiting three basic operations for the refinancing of the debt of the Government of

Venezuela, such as the purchase of debts owed to that government, including accounts receivable; transactions in any debt owed to that government that have been given as collateral and the sale, transfer, assignment, or pledge by the Government of Venezuela of any equity interest in any entity in which that government owns at least 50%.

– Executive Order 13850 of November 1, 2018, by which all property and property interests in or in the United States or in the possession or control of any person in the United States were blocked, and therefore cannot be transferred, paid for, exported, withdrawn, or otherwise negotiated,  of:

(a) Persons operating in the gold sector of the Venezuelan economy or in any other sector that may be determined by the Secretary of the Treasury, in consultation with the Secretary of State;2

(b) Persons who are responsible for or complicit in or who have participated, directly or indirectly, in any commercial transaction through deceptive or corrupt practices and the Government of Venezuela, or projects or programmes administered by that Government;

(c) Persons who have significantly assisted, sponsored, or provided financial, material, or technological support, or goods or services, for any business activity or transaction covered by subparagraph (b) above, or for any business activity or transaction of a person whose property and interests in ownership have been blocked under this Executive Order; and

(d) Persons who are owned or controlled by, or who have acted or purported to act, directly or indirectly, for the benefit of or on behalf of any person whose property and interests in property have been blocked under this Executive Order.

– Executive Order 13857, of January 25, 2019, which clarified and expanded the concept of “Government of Venezuela” that had been used in the aforementioned Executive Orders;

– Executive Order 13884, of August 5, 2019, by which all properties and interests in property of the Government of Venezuela were blocked, and therefore, those properties and interests, which remain in that government, do not

they may be transferred, paid for, exported, withdrawn, or otherwise traded.

II. OFAC Licenses

OFAC issued numerous general licenses, i.e., authorizations with general effect that allow U.S. persons to engage in the otherwise prohibited operations to which they are contracted. A good part of these Licenses are related to PDVSA, or to securities issued by it or by companies owned by it, such as PDV Holding and CITGO Holding.

In addition, OFAC issued a number of specific licences, applicable only to beneficiary companies and therefore not available to third parties.

Of the general licenses, the one that we consider to have had the greatest impact on the Venezuelan economy was General License 41, of November 26, 2022, which authorized the ordinary transactions necessary for the operations and management of Chevron Corporation or its subsidiaries of Chevron’s joint ventures in Venezuela, related to PDVSA or to companies owned by PDVSA of at least fifty percent (50%) of the share capital. The permitted operations included the sale, export to the United States and import from the United States of petroleum and petroleum products produced by the joint ventures; and the purchase and import into Venezuela of goods related to the activities permitted by that General License, including diluents and condensates, petroleum. This License, which was originally extended monthly, was replaced by License 41A, of March 4, 2025, which established April 3, 2025 as the termination date, which in turn was replaced by General License 41B, of March 24, 2025, which established that its validity would end on May 27, 2025. This General License ceased to be in force on that date.

General License 41 was also related to the following General Licenses:

a) General License 8, which in its successive versions allowed the activities of four oil services companies (Halliburton, Schlumberger Limited, Baker Hughes Holdings LLC and Weatherford International, Public Limited Company), for the maintenance of essential operations, contracts and other agreements involving PDVSA or companies in which it owns at least 50% of the capital stock. According to General License 8O, this possibility of providing oil services by these companies to PDVSA or to companies in which it has at least 50% of the capital, ceased to be in force on May 9, 2025.

b) General License 40C, relating to the delivery and discharge of Liquefied Petroleum Gas (LPG) to Venezuela, whose expiration had been scheduled by OFAC to occur on July 8, 2025, but which General License 40D, of July 7, 2025, extended until September 5 of the same year, possibly to cover LPG already on the high seas, dice

that the shipment of that LPG to be delivered and unloaded must have occurred before July 7, 2025.

There are press reports, not officially confirmed, to the effect that specific licences related to the Venezuelan oil sector (authorizations for applicant companies to carry out activities that would otherwise be prohibited) have also been terminated.

On the other hand, it has been reported that Chevron Corporation or its subsidiaries received a specific license that would authorize them to resume operations in Venezuela, under conditions whose details have not been made public, in accordance with the usual practice in this type of license. The U.S. Government has only insisted that this license has restrictions that would prevent the Venezuelan Government from receiving cash revenues as a result of Chevron’s operations, and that Chevron would not pay taxes or royalties to the Government of Venezuela. In the absence of official information, we cannot offer further details, so we limit ourselves to recalling that both General License 41 (which allowed the resumption of Chevron’s operations in Venezuela), and General Licenses 41A and 41B, mentioned above, had similar prohibitions regarding the payment of taxes and royalties.

Additionally, OFAC issued on June 20, 2025, General License 5S, which extended until December 20, 2025, the protection provided in relation to the PDVSA 2020 Bond, with interest of 8.5%, which protects CITGO Holding and PDV Holding, against actions filed by creditors of the Government of Venezuela and PDVSA.  for the non-payment of sums related to that bond.

General License 2A, of August 5, 2019, which authorizes new debts, new operations on the capital of companies and new operations with securities, remains in force, when the only entities of the Government of Venezuela involved in those operations are PDV Holding Inc., CITGO Holding, Inc., or any of their subsidiaries.

III. Conclusions

(A) All Executive Orders referred to in item 1 are currently in effect and, therefore, persons of the United States (citizens, aliens who are lawful permanent residents, entities incorporated under U.S. or other laws but located in the United States, and any person who is in U.S. territory),  they must comply with them at the risk of being sanctioned, even criminally.

(B) OFAC has issued a number of general licences in accordance with changes in United States policy towards the Government of Venezuela, which has gone from an initial period of sanctions to a temporary relaxation of those sanctions, to a further period of elimination of such relaxation, while maintaining the general scheme of the sanctions originally imposed,  including in this scheme the protection of CITGO Holding and PDV Holding against actions aimed at executing the guarantee constituted on the capital of these companies.

Currently, none of the general licenses that temporarily eased sanctions on the Venezuelan oil sector are in force, except for General License 40D, which allows exports or re-exports of LPG to Venezuela until September 5 of this year.

Contact:

LEĜA Abogados
  infolaw@lega.law
  +58 (212) 277.22.00
  www.lega.law

Gonzalo Capriles


Gonzalo Capriles
gcapriles@lega.law
+58 (0212) 277 2252

 

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