The E&P Playbook For Unlocking Venezuela: Navigating The New OFAC Sanctions Landscape

Through a series of recently issued general licenses, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) has relaxed its Venezuela Sanctions Regulations (VSR) to create a critical pathway for permitting investments in the country's oil and gas sector. These include:

• General License 49 (GL 49), which authorizes the negotiation of and entry into contracts for new investment in Venezuela's oil or gas sector operations, conditioned upon separate OFAC authorization of a party's contemplated activities;
• General License 48 (GL 48), which authorizes oil field services companies and others to provide goods, technology, and services necessary to support oil and gas exploration, development, or production in Venezuela; and
• General License 50A (GL 50A), which authorizes transactions related to oil or gas sector operations in Venezuela involving certain specific entities (BP, Chevron, Eni, Maurel & Prom, Repsol, and Shell).

General License 49: Strategic Considerations for E&P Investment in Venezuela

Issued on February 13, 2026, GL 49 provides a regulatory framework for E&P companies evaluating opportunities in Venezuela's energy sector.

It formally authorizes the negotiation of, and entry into, "contingent contracts" for new investment in oil or gas sector operations. Notably, this authorization permits transactions involving the Government of Venezuela, Petróleos de Venezuela, S.A. (PdVSA), and any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest.

While this authorization significantly opens the door for preliminary business development, it is subject to two key operational constraints:

• Condition Precedent for Performance: Any such contracts must be made expressly contingent upon separate OFAC authorization. This means the contract should explicitly identify obtaining a specific license as a condition precedent before any actual performance or implementation can begin.
• Dual-Track Strategy: Because GL 49 does not authorize the execution of the project itself, companies should engage in a dual-track process: conducting in-country negotiations and necessary due diligence (such as commercial, legal, technical, safety, and environmental assessments), while simultaneously pursuing discussions and specific license applications with OFAC to authorize future performance.

GL 49 allows E&P operators to initiate essential preparatory work ahead of potential broader sanctions relief. The license authorizes specific steps to allow companies to engage in:

• Contract Negotiation: structuring and executing contingent agreements for new oil or gas exploration, development, or production activities;
• Operational Expansion: developing terms to expand existing operations in Venezuela or to form new joint ventures related to the aforementioned activities; and
• Comprehensive Due Diligence: conducting the commercial, legal, technical, safety, and environmental due diligence and assessments required to evaluate prospective investments.

To protect capital and insulate the enterprise from secondary risks, agreements should incorporate:

• Conditions Precedent (CPs): Agreements should include specific conditions precedent stipulating that no operational or commercial performance may commence prior to the receipt of separate, explicit authorization from OFAC.
• Counterparty Diligence and Representations and Warranties (R&Ws): Counterparties should be diligenced and contracts should include comprehensive representations and warranties prohibiting transactions involving blocked property, blocked vessels, or persons from the Russian Federation, the Islamic Republic of Iran, the Democratic People's Republic of Korea, the Republic of Cuba, the People's Republic of China, or any entity owned, controlled by, or in a joint venture with such persons.
• Cost Allocation and Termination Provisions: Agreements should define clear cost allocation frameworks and outside termination dates to manage capital exposure during the period pending regulatory review.

E&P entities operating under GL 49 are also advised to implement enhanced compliance protocols to navigate the strict liability nature of OFAC regulations, including:

• Beneficial Ownership Verification: Compliance frameworks should prioritize identifying and excluding any direct or indirect participation by persons from Russia, Iran, North Korea, Cuba, or China. This includes any entities owned or controlled by, or in a joint venture with, such persons.
• Audit Trails for Prefatory Activities: Since GL 49 allows for specific initial steps (such as conducting commercial, legal, technical, safety, and environmental due diligence), organizations should maintain a robust audit trail. This ensures that all permitted activities and associated costs are aligned with the GL's scope and remain commercially reasonable.
• Cross-Agency Regulatory Coordination: Compliance teams must verify and fulfill all requirements of other Federal agencies (most notably the Department of Commerce's Bureau of Industry and Security), as GL 49 does not provide an exemption from separate export control or other regulatory frameworks.

Additional Regulatory Context: General Licenses 48 and 50A

OFAC has also issued two related licenses that provide supplementary context for oil field services companies and certain specified E&P operators:

• GL 48 (Limited Oil Field Services): This license authorizes the provision from the United States or by a U.S. person of goods, technology, software, or services for the exploration, development, or production of oil or gas in Venezuela. Activities authorized under GL 48 include essential maintenance, logistics, and safety services necessary to preserve existing assets in Venezuela.
• GL 50A (Specific Entity Authorizations): This license grants authorization to a select group – BP, Chevron, Eni, Maurel & Prom, Repsol, and Shell – to perform oil and gas exploration and production operations in Venezuela.

Legal and Financial Conditions

Activities authorized under these general licenses are also subject to the following jurisdictional, financial, and reporting mandates:

• U.S. Governing Law and Dispute Resolution: Any contract with the Government of Venezuela or PdVSA entities must be governed by the laws of the United States or a jurisdiction within the United States, and it must provide for dispute resolution in the United States.
• No Dealings Involving Certain Countries: Each of the licenses prohibits transactions involving any individual or entity located in, or owned or controlled by persons in, the Russa, Iran, North Korea, Cuba, China, or any entity owned, controlled by, or in a joint venture with such persons.
• Prohibited Financial Instruments: Each of the licenses prohibits transactions with payment terms that are not "commercially reasonable" and explicitly bans the use of debt swaps, payments in gold, or payments denominated in Venezuelan state-issued digital currencies (such as the "petro").
• Blocked Property and Vessels: None of the licenses authorizes the unblocking of any property blocked pursuant to the VSR. They also prohibit any transactions involving a blocked vessel.
• Foreign Government Deposit Funds: Monetary payments to a blocked person (excluding local taxes, permits, or fees) must be deposited into the U.S. Treasury-controlled "Foreign Government Deposit Funds" (as specified in Executive Order 14373) or another account instructed by the U.S. Treasury. While there is an exception for local taxes, permits, and fees, that exception does not extend to oil or gas taxes or royalties owed to the Government of Venezuela or PdVSA. Such amounts must be remitted to the U.S. Treasury-controlled funds.
• Reporting Obligations: While GL 49 does not mandate reporting for contingent contract negotiations, participants utilizing the operational licenses (GLs 46, 47, 48, and 50) must submit detailed transaction and payment reports to the Departments of State and Energy within 10 days of the first transaction, with subsequent reports required every 90 days.

Administrative and Logistical Updates

For complete situational awareness, E&P operators and oil field service companies should also note recent administrative adjustments made by OFAC:

• General License 46A (Administrative Exceptions): Replacing the previously issued GL 46, this update introduces a practical exception allowing for the payment of local taxes, permits, and fees necessary for conducting authorized operations.
• General License 30B (Port Operations and Diluent Exports): Superseding GL 30A, this update authorizes port and airport operations and removes prior prohibitions on the export of diluents to Venezuela. Complementing GL 47, this addresses a vital logistical requirement for the transport and processing of Venezuela's heavy crude oil.

Companies operating under these GLs should undertake thorough diligence to ensure that they are complying with its conditions and restrictions. The Baker Botts Venezuela Task Force is available to advise on compliance with these GLs and other questions about doing business in Venezuela.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.