October 30, 2019 by Nicholas F. Coward, Alexandre (Alex) Lamy and Meghan Hamilton
On October 17, 2019, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) re-issued and amended as General License No. 13D (“GL 13D”) to continue the validity period for transactions concerning Nynas AB and its affiliates (“Nynas”), as further described below. In addition, on October 21, 2019, OFAC re-issued as General License No. 8D (“GL 8D”) to continue the validity period certain maintenance activities involving Petróleos de Venezuela S.A. (“PdVSA”) where certain entities are involved, as further described below. Finally, on October 24, 2019, OFAC re-issued and amended as General License No. 5A (“GL 5A”) to prohibit dealings or payments for three months related to a specific PdVSA bond. Our blog post regarding previous amendments to these GLs is available here.
- GL 13D
- This further extends the validity period of GL 13 authorizing transactions and activities with Nynas that would otherwise be prohibited under Executive Order 13850 (“EO 13850”) or Executive Order 13884 (“EO 13884”) given Nynas’s 50% ownership by PdVSA.
- This authorization was extended through 12:01 EST on April 14, 2020 (previously GL 13C was valid through October 24, 2019).
- GL 13D now also includes paragraph (c)(3), which clarifies that it does not authorize US Persons to engage in, directly or indirectly, transactions by Nynas that relate to purchases of Venezuelan-origin petroleum or petroleum products, which was already the case given the involvement of other PdVSA entities in such transactions. By its terms, this new provision does not extend to dealings in Nynas products that may be based on Venezuelan-origin petroleum or petroleum products.
- GL 8D
- This extends the validity period of the authorization for transactions and activities that are ordinarily incident and necessary to operations in Venezuela involving PdVSA or its 50%-or-more owned subsidiaries that are otherwise prohibited by EO 13850 and 13884 where the underlying agreement was in effect prior to July 26, 2019 for the following entities and their subsidiaries: Chevron Corporation; Halliburton; Schlumberger Limited; Baker Hughes; and Weatherford International.
- This authorization was extended through 12:01 EST on January 22, 2020 (previously GL 8C was valid through October 24, 2019).
- GL 5A
- GL 5 previously authorized US Persons to deal with or make payments related to the PdVSA 2020 8.5 Percent Bond. With GL 5A, OFAC is prohibiting such dealings or payments through January 21, 2020.
- In an FAQ issued along with GL 5A, OFAC explained that it made this change to address the risk that a failure for PdVSA to make an interest payment related to PdVSA 2020 8.5 Percent Bond during this period could “affect the ability to enforce bondholder rights to the CITGO shares serving as collateral for the Petróleos de Venezuela, S.A. (PdVSA) 2020 8.5 percent bond.”
- OFAC’s FAQ also explains that, under GL 5A, “transactions related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8.5 percent bond are prohibited, unless specifically authorized by OFAC.”
Authors: Nicholas F. Coward, Alexandre (Alex) Lamy and Meghan Hamilton.
