Frequently Asked Questions

661. What does General License 9G authorize with respect to Petróleos de Venezuela, S.A. (PdVSA) debt and equity and what are the implications for U.S. and non-U.S. persons?  

Answer

General License 9G  authorizes U.S. persons to engage in all transactions and activities prohibited by Subsection 1(a)(iii) of Executive Order (E.O.) 13808 or by E.O. 13850, each as amended by E.O. 13857, or by E.O. 13884,  that are ordinarily incident and necessary to dealings in any debt (including, but not limited to, the bonds listed in the Annex to General License 9G) of, or equity in, PdVSA, or any entity directly or indirectly owned 50 percent or more by PdVSA that was issued prior to August 25, 2017 (together, PdVSA Securities), provided that if a U.S. person decides to sell or transfer any interests in such debt or equity, it must sell or transfer the interests to a non-U.S. person unless otherwise authorized by OFAC.  The authorization in GL 9G includes, for example, engaging in transactions related to the receipt and processing of interest or principal payments, and acting as a custodian for U.S. and non-U.S. persons’ holdings in PdVSA Securities, including acting as a custodian for a non-U.S. person after that person has received PdVSA Securities from a U.S. person in a divestment transaction.

Paragraph (c) of General License 9G authorizes all transactions and activities prohibited by Subsection 1(a)(iii) of E.O. 13808 or by E.O. 13850, each as amended by E.O. 13857, or by E.O. 13884, that are ordinarily incident and necessary to facilitating, clearing, and settling trades of holdings in PdVSA Securities, provided such trades were placed prior to 4:00 p.m. eastern standard time on January 28, 2019; this authorization aims to ensure that trades that were placed prior to the imposition of blocking sanctions on PdVSA are allowed to settle in the ordinary course, irrespective of whether the sale or transfer is to a non-U.S. person.

Paragraph (d) of this general license previously authorized all transactions and activities prohibited by Subsection 1(a)(iii) of E.O. 13808 or by E.O. 13850, each as amended by E.O. 13857, or by E.O. 13884, including transactions in securities and security derivatives, that were ordinarily incident and necessary to the wind down of financial contracts or other agreements that were entered into prior to 4:00 p.m. eastern standard time on January 28, 2019, involving, or linked to, PdVSA Securities.  This authorization allowed certain financial contracts and agreements that were entered into prior to the imposition of blocking sanctions on PdVSA that involved or were linked to PdVSA Securities to be wound down, including resolving the purchase and sale of securities, securities lending, repurchase agreements, and swaps and derivative contracts in securities.  This authorization, which was included in prior versions of this general license, expired at 12:01 a.m. eastern daylight time on March 31, 2020.  Parties may apply for a specific license to engage in activity previously authorized by paragraph (d) of General License 9G.

Paragraph (e) of General License 9G authorizes all transactions and activities prohibited by Subsection 1(a)(iii) of E.O. 13808 or by E.O. 13850, each as amended by E.O. 13857, or by E.O. 13884, that are ordinarily incident and necessary to dealings in any bonds issued by PDV Holdings, Inc., CITGO Holdings, Inc., or any of their subsidiaries, prior to August 25, 2017.

U.S. persons may continue to hold their interests in PdVSA Securities, but are subject to certain restrictions on the sale of those interests in the secondary market.  General License 9G does not generally authorize U.S. persons to purchase or acquire new interests in PdVSA Securities, and as a result, such purchases are prohibited absent authorization from OFAC.  However, U.S. persons may purchase or invest in PdVSA Securities pursuant to paragraph (a), as described by paragraph (f)(2), of General License 9G, provided that such transactions are ordinarily incident and necessary to the divestment and transfer of holdings in PdVSA Securities.  While non-U.S. persons may continue to deal in PdVSA Securities, to the extent transactions involve U.S. persons or the U.S. financial system, such transactions must comply with the terms of General License 9G and may not involve sales of interests in such PdVSA Securities to U.S. persons (other than as set forth in GL 9G and described above) as U.S. persons are largely prohibited from purchasing such interests.

Date Released
May 12, 2020