657. I am a non-U.S. entity that purchases petroleum and petroleum products from Petróleos de Venezuela, S.A. (PdVSA) or an entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest. Am I now prohibited from purchasing petroleum and petroleum products from these companies?
Transactions to purchase petroleum and petroleum products from PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, and that involve U.S. persons or any other U.S. nexus (e.g., transactions involving the U.S. financial system or U.S. commodity brokers) must be wound down by April 28, 2019 pursuant to Venezuela-related General License 12. In addition, under General License 11, U.S. person employees and contractors of non-U.S. companies located in a country other the United States or Venezuela are authorized to engage in certain maintenance or wind-down transactions with PdVSA, or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, through 12:01 a.m. eastern daylight time, March 29, 2019. (See FAQ 654.) [01-31-2019]
1) This FAQ and comments thereto were posted/written prior to the blocking of the Government of Venezuela pursuant to EO 13884. The FAQ was not updated in light of that development.
2) At the time this FAQ was posed, PdVSA was blocked pursuant to EO 13850, such that sanctions could be imposed an any person determined to have "materially assisted" PdVSA. In addition, the Venezuelan oil sector was deemed to be subject to the "operating in" designation criterion of Sec. 1(a)(i) of EO 13850. This FAQ is a notable illustration of the way in which, in general, OFAC avoids offering guidance on the scope of derivative designation criteria, and in particular the "material assistance" criterion. The question stem refers to the dealings of "non-U.S. persons" with PdVSA, and the answer only pertains to U.S. persons; in effect, OFAC avoids the question it puts to itself. This was not an accident.
For more on the way in which OFAC interprets the "operating in" designation criterion of EO 13850 with respect to the Venezuelan oil sector, including transactions with PdVSA, see General Note on "Sectoral Sanctions" and Determinations Made Pursuant to EOs Providing for the Blocking of Persons Determined to "Operate In" a Certain Sector (System Ed. Note), as well as Notable "Derivative" Designations - PB Tankers S.P.A. (Italy) (2019). For further discussion of the scope of derivative designation criteria as a whole, see General Note on Secondary Sanctions and “Derivative Designation” Criteria; Identification of the Gap Between the Theoretical and Practical Scopes of Authorities Targeting Transactions with no U.S. Nexus; Enforcement Risk Management (System Ed. Note).