Venezuela-related General License 47, "Authorizing the Sale of U.S.-Origin Diluents to Venezuela."

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TURBOFAC Commentary (288 words)

Notes:

1) Compare/contrast Venezuela General License 46 (a “sister” modeled in a similar fashion). The GLs are modeled in a similar fashion and cover similar activities. Below are certain observations and interpretive questions that arise from the GL, especially when read in light of GL 46, which OFAC has yet to address with formal guidance.

a) How will “U.S. origin” be interpreted? A broad interpretation is “subject to the ,” but it may also turn on customs classification. The term “U.S. origin” does not appear to be included in any OFAC-administered provision, other than those using the term as a stand-in for subject to the EAR.

b) This GL notably does not include a “Foreign Government Deposit Funds” provision or an “established U.S. entity” provision.

c) The note to para (a) in GL 46 interprets para (a) such that payment for oil with diluents is covered (i.e. the payment with diluents is a transaction “ordinarily incident” to the purchase of the oil). Does GL 47 operate such that Venezuelan purchasers can pay for diluents in-kind with crude oil? If so, and to the extent that in-kind payments are presumptively “ordinarily incident” unless otherwise specified, the result may be that there is an authorization for the kind of swap that GL 46 more explicitly allows for, but without the “established U.S. entity” requirement.

d) OFAC notably removed “the Russian Federation” from the “[a]ny transaction involving” caveout.

e) The GL states that “the unblocking of any property blocked pursuant to the VSR, except as provided in paragraph (a),” while GL 46 says no unblocking of property at all. One wonders what OFAC has in mind here as it relates to the unblocking of property.

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Venezuela-related General License 47, "Authorizing the Sale of U.S.-Origin Diluents to Venezuela."

TURBOFAC Commentary (288 words)