Sanctions Against Venezuela - Designation of PDVSA - Further Developments

In our News Item of 8 February 2019 we noted that "it appears unlikely that the current sanctions [against PDVSA] will impact on non-U.S. persons". As a new Client Alert from the Club's U.S. attorneys Freehill Hogan & Mahar makes clear, however, recent statements by members of the U.S. administration have begun to cast some doubt on that conclusion.

Certainly so far as the shipment of petroleum cargoes from Venezuela to Cuba is concerned, a warning to carriers and insurers that they are "now on notice" about the cessation of these exports by the U.S. National Security Advisor John Bolton has been acted upon, with the vessel "Despina Andrianna" and her owners and managers being placed on the SDN List for petroleum shipments between the two countries. Freehill's consequently conclude that "...there would now appear to be a clear risk of sanctions for any vessel engaged in trade between PdVSA and Cuba."

Likewise on a wider basis, comments by the U.S. Special Representative for Venezuela Elliot Adams have suggested that any dealings with PDVSA over petroleum products even by non-U.S. persons may be deemed sanctionable activity. Freehills note that:

"Based on recent developments and statements by the U.S. authorities, caution should be exercised in all dealings with PdVSA. At a minimum, non-U.S. persons should ensure that there is no U.S. nexus in any dealings they have with PdVSA. However, non-U.S. persons should now understand that there may be some risk of sanctions if they engage in transactions with PdVSA." 

Members are therefore strongly urged to carefully consider the risks of entering into any trade involving PDVSA and are encouraged to contact the Managers should they have any questions.