Sanctions on Venezuela

Dear All,

We are receiving some questions as to sanctions on Venezuela by the U.S. government and would like to bring to the attention of our clients a Feb 2021 circular attached and issued by Skuld, a member of the International Group of P&I Clubs.

U.S. Persons are prohibited from engaging in any transaction involving the Government of Venezuela. Definition of Government of Venezuela is broad and includes Petroleos de Venezueala (PdVSA) – which is an SDN (Specially Designated National) already - and any person owned or controlled directly or indirectly by the Government of Venezuela.

However we would like to draw special attention to information on page 3 which suggests that may make also non-US persons, entities subject to sanctions.

“The US government can impose sanctions an "any person" (apparently including non-US persons) determined to have "...materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of... any person whose property and interests in property are blocked pursuant to this order." (EO 13850 Section 1(a)(iii)). The administration did not initially indicate that it intended this provision to apply to non-US persons and OFAC FAQ 657 could be read as implying that it did not so intend. However there remained an element of doubt and recent statements by the US administration (see above) indicate that it considers non-US persons may after all be susceptible to sanctions if they deal with PdVSA.

• Non-US companies involved in the transportation of PdVSA cargo to the US must comply with US sanctions.
• Non-US companies which make or receive PdVSA related payments in USD bring the transaction under US jurisdiction even in relation to cargo which is not carried to the US.
• Vessels carrying petroleum products originating from Venezuela to Cuba face a clear risk of being sanctioned.
• It is possible that there may be some banking delays in PdVSA related transactions even in a currency other than USD. This will depend upon how banks frame their policies in the light of the designation.
• It is possible (but not clear) that a foreign entity listed on the NYSE may be treated as US person.
• The Venezuelan cryptocurrency the "Petro" is unlikely to provide a solution and its use by US persons is likely to be a breach of sanctions.
• A non-US entity should not assist or facilitate a US person (such as a US employee) in acting in contravention of the measures applicable to US persons.”

As you will recall U.S. Government has made Group Clubs implement a tracking system of vessels’ their trading pattern.  Our circular in that respect is also attached for your ease of reference. We have also come across news that US authorities are also pressurising classification societies to establish whether vessels have violated sanctions regulations and to withdraw certification.