VENEZUELA: PAYMENT IN ‘PETROS’ WILL INFRINGE US EXECUTIVE ORDER
April 12, 2018
We have received alerts from Venezuelan correspondents and lawyers in the US about payment of port charges in Venezuela and the risk of shipowners infringing US Executive Orders (EO). In August 2017 the US President issued an EO prohibiting US persons or anyone within the US from extending debt to the Venezuelan government or to Petroleos de Venezuela (PDVSA). In January 2018, partly to try and circumvent the EO, Venezuela introduced its own crypto or digital currency, called the Petro. The Venezuelan authorities said that ship agents would, in future, have to pay in Petros for services provided to foreign flagged ships, such as pilotage and towage.
On 19 March 2018 a further EO was issued by the US President prohibiting US persons or anyone in the US from dealing in crypto or digital currencies issued by Venezuela. This presents a possible problem for shipowners because, if the funds they pass to their local agents are subsequently transferred into Petros, the shipowners could be in breach of the EO if the funds pass through the US banking system at any point (which is highly likely if payments are made in US dollars). At the time of writing, the Venezuelan authorities have not issued any details of how payment in Petros will be made and so the situation has not been tested. However, the advice from US lawyers is to be very careful when remitting funds to Venezuela to ensure that they will not be used to purchase Petros and, therefore, be in violation of the US provisions. It is highly likely that the US authorities will be looking closely at all financial transactions relating to Venezuela.