OFAC Opens Petroleum Transactions Between U.S. Entities And Petroleos De Venezeula, S.A.

General License 52 (GL 52), recently issued by the Office of Foreign Assets Control (OFAC), represents a significant departure from prior U.S. prohibitions on conducting business in Venezuela, effectively reopening portions of the Venezuelan oil market to U.S. entities for certain oil related transactions. For a deeper look into Venezuelan GLs, see prior Lewis Brisbois analysis here.

Executive Order 13850 (E.O. 13850), originally imposed in November 2018, targeted Petróleos de Venezuela, S.A. (and its 50 percent owned entities) (PdVSA) by blocking transactions in the Venezuelan oil sector. A year later, Executive Order 13884 (E.O. 13884) went further and blocked any transactions with the Venezuelan government and any entity controlled by it (Executive Orders).

Notwithstanding PdVSA's continued blocked status, GL 52 eases these prior Executive Order prohibitions and authorizes specific petroleum related transactions between PdVSA and U.S. entities established prior to January 29, 2025 (U.S. entities), significantly expanding the scope of allowable business investments in the Venezuelan oil and petrochemical sectors.

In practice, GL 52 enables existing U.S. entities to resume certain petroleum operations in Venezuela and allows those entities to market and sell Venezuelan origin oil and petrochemical products outside of Venezuela, subject to applicable restrictions.

New Business Opportunities

GL 52 authorizes transactions between U.S. entities and PdVSA relating to Venezuelan origin oil and petroleum products, including their lifting (physical taking possession of for export and sale), export, sale, supply, storage, marketing, purchase, delivery, and transportation.

The authorization also extends to the provision of diluent (fluid added to crude oil to reduce viscosity or concentration), goods, services, and technology necessary for oil, gas, or petrochemical exploration, development, or production, as well as entry into new investments and joint ventures in Venezuela and all transactions ordinarily incident and necessary thereto, including commercial, legal, technical, safety, and environmental diligence.

Key Conditions Impacting Financing and Contracting

GL 52 exclusively governs contracts with PdVSA and requires that such contracts specify U.S. law and U.S. dispute resolution as the governing authority. Further, pursuant to GL 52, any monetary payment to PdVSA (other than local taxes, permits, or fees) must be made into the Foreign Government Deposit Funds specified in E.O. 14373 or another account as instructed by the U.S. Department of Treasury.

Similarly, transactions involving the Government of Venezuela necessary for GL 52 activities are authorized, provided payments to blocked persons follow the same deposit requirement.

Core Exclusions and Restrictions

GL 52 does not authorize, inter alia:

• Dealings with any OFAC Specially Designated Nationals and Blocked Persons (SDNs), excluding PdVSA, including entities 50 percent or more owned by such SDNs;
• Entry into a settlement agreement or enforcement of any lien, judgment, arbitral award, decree, or other order through execution, garnishment, or other judicial process affecting blocked property or interests;
• Transactions involving persons located in or organized under the laws of Russia, Iran, North Korea, or Cuba, or entities owned/controlled by or in joint venture with such persons;
• Transactions involving an entity located in or organized under the laws of Venezuela or the United States that is owned or controlled, directly or indirectly, by or in a joint venture with a person located in or organized under the laws of China;
• Terms that are commercially unreasonable, involve debt swaps or payment in gold, or that are denominated in Venezuelan government digital assets.

Reporting Obligations for Non-U.S. Destinations

GL 52 requires reporting for any export, reexport, sale, resale, or supply of Venezuelan origin oil or petrochemical products to destinations outside the United States. Reports must be submitted to Sanctions_inbox@state.gov and VZReporting@doe.gov within 10 days of the first transaction and every 90 days thereafter while ongoing, and must include the parties involved, transaction details (products, quantities, values, dates, and ultimate destination countries), and any payments to the Government of Venezuela.

Key Takeaways

GL 52 allows U.S. entities to engage in a variety of petroleum-related transactions with PdVSA as an exception to prohibited transactions under existing Executive Orders.

An established U.S. entity can now commit new capital to expand production in a joint venture with PDVSA—including drilling new wells, upgrading infrastructure, and increasing output. Additionally, a U.S. entity can now lift Venezuelan crude and sell the oil into global markets, notwithstanding GL 52 restrictions, without violating sanctions, whereas prior frameworks were more constrained and did not clearly support this broader, multi-layered commercial trading structure.

While there are limitations on how these transactions are financed and executed, GL 52 provides a pathway to new and increased business opportunities in Venezuela for eligible U.S. entities.