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OFAC designated the Swiss-operated, Russian-controlled oil brokerage firm Rosneft Trading S.A., and its Board Chair, for ongoing operations in the oil sector of the Venezuelan economy in violation of Executive Order 13850 ("Blocking Property of Additional Persons Contributing to the Situation in Venezuela").
OFAC also issued General License 36 ("GL 36"), allowing U.S. persons to conduct certain transactions involving Rosneft Trading S.A. that are necessary to wind down transactions with Rosneft Trading S.A. GL 36 is valid until May 20, 2020.
In addition, OFAC provided two new FAQs. FAQ 817 explains that the designation of Rosneft Trading S.A. applies only to that company and to any entities owned, directly or indirectly, 50 percent or greater by it. The blocking sanctions do not extend to Rosneft Trading S.A.'s ultimate parent, Open Joint Stock Company Rosneft Oil Company, or any other Rosneft entities that are not owned at least 50 percent or more in the aggregate by Rosneft Trading S.A. and other blocked persons. OFAC noted that Rosneft Trading S.A. is also identified on the Sectoral Sanctions Identifications ("SSI") List and subject to Directives 2 and 4 under Executive Order 13662. FAQ 817 makes clear that "those U.S. persons who are winding down transactions with Rosneft Trading S.A. should ensure all activities comply with any applicable Directive 2 and 4 prohibitions"; e.g., prohibitions on the extension of debt longer than 60 days' maturity.
Commentary James Treanor
OFAC's designation of Rosneft Trading S.A. takes direct aim at Russia, a key foreign patron of Venezuelan leader Nicolás Maduro. By targeting a Rosneft trading subsidiary and not its parent - which is one of the largest oil companies in the world - the U.S. government seems to be keeping some of its powder dry. Indeed, with U.S. Special Representative Elliott Abrams promising "more steps and further pressure in the coming weeks and months," this designation of Rosneft Trading S.A. is unlikely to be the last word.
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