Biden-Harris Administration Decision By OFAC To Extend U.S. Energy Companies Presence In Venezuela Through General License 8I Is Helpful To Cuba. Trump-Pence Administration Did The Same.
/United States-based companies have continued to operate in Venezuela within provisions of licenses issued by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury.
United States-based Baker Hughes Company (2020 revenues approximately US$23 billion), Chevron Corporation (2020 revenues approximately US$147 billion), Halliburton Company (2019 revenues approximately US$22 billion), Schlumberger (2020 revenues approximately US$33 billion), and Weatherford International (2020 revenues approximately US$5.4 billion). In 2014, Weatherford pleaded guilty and was fined by the OFAC for exporting oil equipment through third countries to the Republic of Cuba.
An argument for maintaining United States-based oil field services company operations in Venezuela is the strategic importance of preserving the value of the oil fields- and revenues from oil exports account for nearly ninety percent (90%) of the gross national product (GNP) of Venezuela. Maintaining value of the oil fields is important also for preserving assets which may be subject to claims against Venezuela for the expropriation of assets owned by United States-based oil field services companies. There is support for not decapitating all of the United States-based commercial presence in Venezuela for fear that non-United States-based companies will replace United States-based companies. Officials in the Biden-Harris Administration (2021- ) have discussed a re-opening of the United States Embassy in Caracas.
With commercial, economic, and political infrastructure in Venezuela strengthening and gaining elasticity, less pressures result in Venezuela maintaining, and in some instances increasing its commercial and economic support to the Republic of Cuba.
As the distance continues to expand from 2018 when the United States demanded that President Nicolas Maduro (2013- ) vacate the Palacio de Miraflores in Caracas and no departure is reasonably believed forthcoming, there becomes an institutionalization of the issue and a perception of intractiveness, resulting in decreased interest by relevant state actors in pursuing an outcome sought by the United States. The status quo becomes rigid and foundational.
China, Cuba, India, Italy, Iran, Russia, Spain, Thailand, Turkey, United Arab Emirates, and United States among others have commercial, economic, and political bilateral relationships with Venezuela and with one another. Thus, there are interlocking relationships that need be adequately addressed for each government to agree to support any resolution to issues relating to Venezuela.
LINK To “2024 Process For Venezuela”
OFFICE OF FOREIGN ASSETS CONTROL
Venezuela Sanctions Regulations
31 CFR part 591
GENERAL LICENSE NO. 8I
Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities
(a) Except as provided in paragraphs (c) and (d) of this general license, all transactions and activities prohibited by Executive Order (E.O.) 13850 of November 1, 2018, as amended by E.O. 13857 of January 25, 2019, or E.O. 13884 of August 5, 2019, each as incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591 (the VSR), that are ordinarily incident and necessary to the limited maintenance of essential operations, contracts, or other agreements, that: (i) are for safety or the preservation of assets in Venezuela; (ii) involve PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest; and (iii) were in effect prior to July 26, 2019, are authorized through 12:01 a.m. eastern daylight time, June 1, 2022, for the following entities and their subsidiaries (collectively, the “Covered Entities”):
Chevron Corporation
Halliburton
Schlumberger Limited
Baker Hughes Holdings LLC
Weatherford International, Public Limited Company
Note to paragraph (a): Transactions and activities necessary for safety or the preservation of assets in Venezuela that are authorized by paragraph (a) of this general license include: transactions and activities necessary to ensure the safety of personnel, or the integrity of operations and assets in Venezuela; participation in shareholder and board of directors meetings; making payments on third-party invoices for transactions and activities authorized by paragraph (a) of this general license, or incurred prior to April 21, 2020, provided such activity was authorized at the time it occurred; payment of local taxes and purchase of utility services in Venezuela; and payment of salaries for employees and contractors in Venezuela.
(b) Except as provided in paragraph (d) of this general license, all transactions and activities prohibited by E.O. 13850, as amended, or E.O. 13884, each as incorporated into the VSR, that are ordinarily incident and necessary to the wind down of operations, contracts, or other agreements in Venezuela involving PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, and that were in effect prior to July 26, 2019, are authorized through 12:01 a.m. eastern daylight time, June 1, 2022, for the Covered Entities.
(c) Paragraph (a) of this general license does not authorize: (1) The drilling, lifting, or processing of, purchase or sale of, or transport or shipping of any Venezuelan-origin petroleum or petroleum products; (2) The provision or receipt of insurance or reinsurance with respect to the transactions and activities described in paragraph (c)(1) of this general license; (3) The design, construction, installation, repair, or improvement of any wells or other facilities or infrastructure in Venezuela or the purchasing or provision of any goods or services, except as required for safety; (4) Contracting for additional personnel or services, except as required for safety; or (5) The payment of any dividend, including in kind, to PdVSA, or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest.
(d) This general license does not authorize: (1) Any transactions or dealings related to the exportation or reexportation of diluents, directly or indirectly, to Venezuela; (2) Any loans to, accrual of additional debt by, or subsidization of PdVSA, or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, including in kind, prohibited by E.O. 13808 of August 24, 2017, as amended by E.O. 13857, and incorporated into the VSR; or (3) Any transactions or activities otherwise prohibited by the VSR, or any other part of 31 CFR chapter V, or any transactions or activities with any blocked person other than the blocked persons identified in paragraphs (a) and (b) of this general license.
(e) Effective November 24, 2021, General License No. 8H, dated June 1, 2021, is replaced and superseded in its entirety by this General License No. 8I.
LINK To OFAC General License No. 81
