VENEZUELA: SANCTIONS RISK WHEN DEALING WITH STATE OIL COMPANY (PDVSA)

April 25, 2019

On 12 April 2019 the US Office of Assets Control (OFAC) added four shipowners and nine ships to the SDN List on the basis that they had been involved in transporting oil from Venezuela to Cuba and had, therefore, been “operating in the oil sector of the Venezuelan economy” in breach of Executive Order 13850 issued on 1 November 2018.

Following the designation of PDVSA (the Venezuelan state oil company) as an SDN on 28 January 2019 and in light of FAQs issued by OFAC on 31 January, it had been thought that non-US shipowners and ships could continue to transport Venezuelan oil to countries other than the US without the risk of breaching US sanctions. However, and although it may have arisen due to the involvement of Cuba, the actions of OFAC on 12 April and recent comments by senior US government figures suggest that OFAC may now regard any non-US shipowner or ship that carries Venezuelan oil to any destination as operating in the Venezuelan oil sector and, therefore, at risk of being designated as an SDN.

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