On November 9, OFAC published two new Frequently Asked Questions (FAQs) with regard to Venezuela-related sanctions pursuant to Executive Order 13808 (E.O.), issued on August 24. The E.O. prohibits U.S. persons from dealing in new debt, bonds and securities with the Government of Venezuela and Petróleos de Venezuela (PDVSA).

FAQ 547 addresses whether U.S. persons can participate in meetings about restructuring outstanding debt by the Venezuelan Government or PDVSA. OFAC explains that provided that no SDNs are involved in any restructuring efforts, General License 3 of the E.O. authorizes U.S. persons to engage in transactions related to certain bonds specified in the Annex to General License 3. Notably, General License 3 does not authorize transactions involving new debt of the Government of Venezuela—for a maturity of more than 30 days—or to PDVSA—for a maturity of more than 90 days. Therefore, while OFAC appears to allow U.S. persons to participate in restructuring negotiations covered by General License 3, it appears that any restructuring agreement resulting from such negotiations would yet require specific government authorization. OFAC defines “new debt” broadly, including, for example, extensions of credit.

FAQ 548 relates to whether “PDVSA” includes all PDVSA subsidiaries for purposes of the E.O. The FAQ clarifies that the E.O. extends to all subsidiaries of PDVSA unless authorized by OFAC. In particular, General License 2 authorizes transactions with CITGO Holding, Inc., and any of its subsidiaries. CITGO Holding, Inc. is a subsidiary of PDVSA and has operations in the United States.

For more details on the E.O. issued on August 24, see Crowell’s Client Alert.

For more information, contact: Cari Stinebower, Jeff Snyder, Dj Wolff, Eduardo Mathison