OFAC Backlog Reported Growing

The termination of  general license 44A, which had offered temporary relief from Venezuel oil sanctions, reportedly has created a crush of license applications to OFAC.

The French firm Maurel & Prom announced last week receipt of a license applied for in September for a project on Lake Maracaibo.   Service providers who gambled on a continuation of the General License are now in a months-long queue.

The backlog “is not only going to affect potential new businesses but also the ones that are already there, because they are facing a series of contract breaches,” Margarita Sanchez, lead of the international arbitration practice at Miller & Chevalier, told Bloomberg. 

OFAC issued GL 44A to implement an orderly process for wind-down transactions that had been previously authorized and were being conducted pursuant to GL 44.  OFAC clarified that entering into new business, including new investments (which was previously authorized under GL 44), will not be considered a wind-down transaction.

May 31, 2024  Deadline

Holland & Knight notes that "U.S. and non-U.S. persons (including those who relied on GL 44 to

1. do business in or with the Venezuelan oil and gas sector, or
2. address the repayment of certain debts owed by the government of Venezuela)

who are unable to wind down certain transactions before May 31, 2024, will need to evaluate whether a specific license will be necessary. OFAC has indicated it will consider specific license requests on a case-by-case basis for those seeking to engage in transactions that were previously authorized under GL 44 (e.g., new investments in the oil or gas sector in Venezuela).