VENEZEULA Trends and Developments Contributed by: Maryna Pogibko, Rafat A Rizvi and Mykhailo Grydzhuk, Amadeus
arrangements, and that the authorisation extends to due diligence and assessments needed to prepare such investments. This is a sophisticated tool. It allows parties to negoti- ate and document current economic terms and pre- serve commercial optionality, while recognising that final execution of the underlying investment requires additional authorisation. OFAC FAQ 1244 confirms that specific licence applications to perform contin- gent contracts “will be assessed on a case-by-case basis consistent with U.S. foreign policy and national security priorities”. For some companies, that level of flexibility will be enough. For others, GL 50A and GL 52 provide broader authorisation. FAQ 1242 states that GL 50A authorises, for the entities listed in its Annex and their subsidiaries, transactions related to oil or gas sec- tor operations in Venezuela, including exporting oil or gas, providing or receiving goods and services, mak- ing new investment, expanding operations, conduct- ing new exploration or production activity and form- ing new joint ventures or related entities. The Annex names BP, Chevron, Eni, Maurel & Prom, Repsol and Shell. GL 52 is broader still in one important respect. FAQ 1245 states that GL 52 authorises established US entities “subject to its conditions and exclusions, transactions prohibited by Executive Orders (E.O.s) 13884 or 13850 with Petróleos de Venezuela, S.A. (PdVSA) and any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest” involving lifting, export, sale, supply, diluent, goods, services, new investment contracts, the formation of new joint ventures and the performance of commercial, legal, technical, safety and environmental due diligence. That is a major opening, but it remains bound by defined conditions and exclusions. The structuring rules The central mistake in this market would be to believe that a good commercial opportunity can later be made compliant. In relaxing the rules to access the oil and gas sector, the USA has made it clear that relaxed rules does not mean no rules. Under the 2026 frame-
work, compliance comes first and structure deter- mines whether the opportunity is valid. • Several of the key authorisations are built around the concept of an “established U.S. entity.” OFAC FAQ 1229, and the text of GL 52 itself, define that term as “any entity organized under the laws of the United States or any jurisdiction within the United States on or before January 29, 2025”. This distinction deserves emphasis. A newly formed US-domiciled vehicle may still be useful in a broader transaction architecture, but it does not automatically satisfy the threshold for licences that are expressly limited to so-called established US entities. • US law is no longer merely optional but a prerequi- site for participation. GL 52 requires that contracts with PdVSA or PdVSA entities specify that the laws of the USA, or any jurisdiction within the USA, govern the contract and that any dispute resolution under such contracts with PdVSA or its subsidi- aries must follow US law and include US-based dispute resolution. • Payment discipline: GL 52, GL 46B and FAQ 1241 require that monetary payments to blocked persons, other than routine local taxes, permits or fees, be made into the Foreign Government Deposit Funds established under Executive Order 14373, or into another Treasury-instructed account. Executive Order 14373 defines those funds as US Treasury-held accounts for monies derived from the sale of natural resources from, or the sale of diluents to, the government of Venezuela and its instrumentalities. • Counterparty discipline: GL 46B, GL 49A and GL 52 exclude transactions involving Russia, Iran, North Korea and Cuba, as well as entities owned/ controlled by, or in joint ventures with, individuals from these countries. They also exclude certain Venezuela- or US-based entities owned/controlled by, or in joint ventures with persons from the Peo- ple’s Republic of China. This is not a minor drafting point: sanctions screening and ownership analysis must go beyond checking the names on the first page of a transaction. • Reporting: GL 46B and GL 52 require detailed reports to US authorities for exports, resales or supplies of Venezuelan-origin oil or petrochemical
577 CHAMBERS.COM
Powered by FlippingBook