OFAC Issues Updated General License 8G Extending Authorization of Transactions with PdVSA for Five Petroleum Companies

On November 17, 2020, OFAC issued Venezuela General License 8G, “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities.”  General License 8G extends the pre-existing authorization for US persons to engage in certain transactions and activities involving the Venezuelan state-owned oil company PdVSA through 12:01 a.m. eastern daylight time, June 3, 2021, for Chevron, Halliburton, Schlumberger, Baker Hughes, and Weatherford International.  These are some of the most significant petroleum companies with US connections operating in Venezuela.  Aside from extending the expiration date – which had been December 1, 2020 – General License 8G is substantively the same as general License 8F, which it replaces. Specifically, General License 8G authorizes US persons to engage in transactions and activities “ordinarily incident and necessary to the limited maintenance of essential operations, contracts, or other agreements” for the above-mentioned companies and their subsidiaries that –

1. are for safety or the preservation of assets in Venezuela;
2. involve PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest; and
3. were in effect prior to July 26, 2019.

General License 8G also authorizes US persons to wind down operations, contracts, or other agreements for these companies that involve PdVSA and were in effect prior to July 26, 2019. As noted above, these authorizations are now in force through 12:01 a.m. eastern daylight time, June 3, 2021. General License 8G continues to list certain activities that are not covered by the authorization.  For example, General License 8G specifies that the drilling, lifting, processing, purchase or sale, or transport or shipping, of Venezuelan-origin petroleum are not considered activities for safety or the preservation of assets in Venezuela. OFAC first issued General License 8 on January 28, 2019, as we discussed in a prior International Law Advisory.  Since then, OFAC has issued superseding licenses 8A-8G, refining the scope of permitted activities and extending the authorization timeline. We will continue to monitor and report on sanctions developments. Further commentary is available on the Steptoe International Compliance Blog.