Introduction
The United States first imposed sanctions targeting the Venezuelan government in 2015. Both the US and EU have designated individuals associated with the regime. The US measures against the government of Venezuela were significantly extended in January 2019 to target PdVSA. While initially thought to have limited direct impact on non-US persons engaged in trade with no US nexus, statements emerging from the US administration during March and April 2019 included warnings that non-US persons dealing with PdVSA might be exposed even in the absence of a US nexus. (see US Treasury press release).
An International Group Circular on US Sanctions against the Government of Venezuela and PdVSA was published on 12 September 2019.
A further significant development took place with the publication of Executive Order 13884 on 5 August 2019, together with amended and new FAQs and general licenses. All property of the Government of Venezuela in the US or within the control or possession of US persons is blocked. The term "Government of Venezuela" is widely defined and includes PdVSA (see E.O. 13850, as amended by E.O. 13857, Sec 6(d)). As with earlier measures, the question arises of application to non-US persons – see EO 13850 Sec 1(a)(iii) below. E.O. 13884 authorises asset freezing on "any person" determined to (i) have materially assisted or supported any person or entity whose property is blocked pursuant to the E.O., or (ii) be owned or controlled by or to have acted on behalf of any such person or entity. The carriage of cargo may well fall within the scope of material assistance.
The intention behind the E.O. therefore is to expose non-US persons and entities to US sanctions - or at the very least to deter them from doing business with the Maduro regime.
It should be noted that sanctions regulations are subject to change without notice and with immediate effect. The situation in Venezuela is volatile and the US, EU and other States may expand or remove sanctions to reflect political developments. Since the designation of PdVSA, the US has continued to make regular additions to the SDN list.
US
A significant ramping up of US sanctions took place on 28 January 2019 with issue of Executive Order 13857 which extended the scope of Executive Order 13850 by designating Petroleos de Venezuela, S.A (PdVSA) as a Specially Designated National ("SDN"). This includes entities in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, subject to some limited relief for PdVSA's US subsidiaries CITGO and PDV Holdings.
The designation prohibits US persons from engaging in transactions with PdVSA or its subsidiaries unless they are able to bring themselves within the scope of a General License. All PdVSA property which is subject to US jurisdiction is blocked.
The designation does not on the face of it have extraterritorial effect, but non-US persons may be affected in a number of ways:
- The US government can impose sanctions an "any person" (including non-US persons) determined to have "...materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of... any person whose property and interests in property are blocked pursuant to this order." (EO 13850 Section 1(a)(iii)).
- Additionally, sanctions may be imposed against non-U.S. persons that are found to operate or have operated in certain sectors of the Venezuelan economy, including the petroleum sector.
- Non-US companies involved in the transportation of PdVSA cargo to the US must comply with US sanctions.
- Non-US companies which make or receive PdVSA related payments in USD bring the transaction under US jurisdiction even in relation to cargo which is not carried to the US.
- A non-US entity should not assist or facilitate a US person (such as a US employee) in acting in contravention of the measures applicable to US persons.
On 18 October 2023 OFAC issued several General Licenses, authorizing certain transactions otherwise prohibited by the US Venezuela sanctions program, including General License 44 which on a temporary basis (until 18 April 2024) authorised transactions that are related to oil and gas sector operations in Venezuela, including necessary transactions with PDVSA (or entities owned/controlled by it) and certain blocked Venezuelan banks. This license came in addition to General License 41 at the time, which permitted the carriage of oil from Chevron joint ventures.
In February 2025, the US administration announced the reversal of previously granted concessions for oil transactions with Venezuela and the above-mentioned General Licenses have since wound down.
Following the expiration of these GLs, no further transactions specified in the GLs are authorized, and the Association is unable to assist members involved in such trade. Additionally, we understand that most individual licenses and authorizations previously granted for trade with Venezuela have been revoked.
Members are reminded that cover is unavailable for trade that breaches applicable sanctions. Therefore, members are strongly advised to exercise the highest level of caution when considering shipments to or from Venezuela, when dealing with Venezuelan entities or individuals, and most importantly, when lifting Venezuelan-origin cargoes. In accordance with sanctions regulators' standards, members should conduct their own enhanced due diligence investigations to avoid any element of illegality, such as prohibited cargoes, prohibited activities, or dealings with Specially Designated Nationals (SDNs) in their fixtures.
For further information members are referred to the US Treasury Resource Center for Venezuela-related Sanctions.
A check on the OFAC Sanctions Search will identify designated individuals and entities.
EU
The European Union sanctions against the Venezuelan regime are far more limited in scope. There are measures which ban travel and freeze assets of 18 individuals closely connected with the Maduro regime and an embargo on arms and equipment for internal repression. EU's restrictive measures in relation to Venezuela due to their ongoing political, economic, social and humanitarian crisis and satiation with the rule of law and human rights are now extended until 14 November 2023, see Council Decision (CFSP) 2022/2201 and Council Implementing Regulation (EU) 2022/2194. These provisions have been implemented in Norway.
Cover
There are no specific sanctions against insurance providers. However, members conducting business which involves Venezuela should exercise caution, particularly if there is a US nexus, and seek legal advice. This is particularly important in the light of the volatile situation.
Members and clients must do their own due diligence and the position remains that while Skuld can give guidance, the ultimate responsibility for compliance rests with members and clients.
Our Rules contain exclusion of liability for liabilities, costs or expenses where payment by the Association or the provision of cover in respect thereof may expose the Association to the risk of being subject to a sanction, prohibition or any adverse action (Rule 30.4.6).
We also remind that we exclude the liability of the Association towards the member when there is a shortfall due to an inability to recover reinsurance or pool contributions from other insurers or P&I Clubs which are themselves unable to pay due to sanctions legislation (Rule 32.6). In addition, we have a provision giving the Association the right to terminate cover where, in the opinion of the Association, the member has exposed or may expose the Association to the risk of being or becoming subject to a sanction, prohibition, restriction or other adverse action by a state or international organisation or competent authority (Rule 3.3.2 e). The same provisions are also included in the Terms & Conditions governing Skuld's fixed premium covers.
We also continue to experience difficulties in executing payments to Venezuela due to ongoing banking restrictions and compliance challenges. These issues may affect the availability and reliability of payment channels and provision of security. We advise members and clients to anticipate potential challenges and to consult with their financial institutions for guidance on transaction feasibility.