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Venezuela Sanctions Update

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The sanctions risks associated with trade involving Venezuela, particularly petroleum, have escalated in light of recent actions by OFAC.

On 5 April 2019, OFAC designated two non-US companies under Executive Order 13850 for operating in Venezuela’s oil sector, specifically for transporting Venezuelan oil to Cuba. There are no specific prohibitions against this trade, so it appears that that OFAC is willing to treat the EO expansively and use it to sanction non-US persons in relation to a range of activities which support the Maduro regime.

A recent State Department press briefing by the US Special Representative for Venezuela, Mr Elliot Abrams, suggests that the purchase of petroleum products from, or the supply of petroleum products to, PdVSA would expose persons involved in those activities to sanctions risks:

“We have had conversations with foreign oil traders, with foreign governments, really along the same lines – that is, you should be supporting Interim President Guaido, you should not be supporting this regime, you should not be buying oil from this regime and giving them cash. And we’ve noted that we have a wide, broad net with our sanctions, and so we’ve warned people, be careful not to get caught in that net by activities that you may think don’t come into it but actually are caught by it”.

In addition, Mr Abrams confirmed that the US Government is reaching out to suppliers of petroleum products to PdVSA and warning them that such action is potentially sanctionable as “material assistance” to PdVSA, under Sec 1(a)(iii) of the EO 13850.

Please find here a link to an article published by U.S law firm Freehill Hogan & Mahar commenting on these developments.