OFAC Issues General License 46

Baker Botts Venezuela Task Force

Trump administration authorizes transactions involving Venezuelan oil sector, but subject to detailed conditions to align with U.S. policy objectives. Companies seeking to do business with Venezuela should confirm that their operations will comply with those conditions.

In the aftermath of the January 3 arrest of Nicolas Maduro, President Trump announced ambitious plans for the future of U.S.-Venezuela relations, focusing on U.S. involvement in modernizing Venezuela's oil sector. Pursuing those plans would require a relaxation of the extensive network of sanctions that the United States has imposed on Venezuela for over a decade. Senior administration officials stated that sanctions relief would be forthcoming, and investors reportedly have been lining up to apply for company-specific licenses from the Office of Foreign Assets Control at the Department of the Treasury (OFAC).

On January 29, OFAC took an important step forward by issuing General License 46 (GL 46), which authorizes certain activities in Venezuela's oil sector that otherwise would be prohibited by U.S. sanctions. Unlike a specific license, a general license authorizes all qualifying persons to engage in the activities covered by the license without need to apply to OFAC.

GL 46 is notable not only for the activities that it permits but also for the conditions and limitations it imposes to ensure that parties availing themselves of the license do so in a manner consistent with U.S. policy. Companies interested in relying on the license should make sure that their activities meet the stated conditions and do not run afoul of any of the limitations. Additionally, companies will need to take account of the interplay between GL 46 and Venezuela's Hydrocarbons Law, which currently is being amended by Venezuela's National Assembly.

Subject to conditions and limitations, GL 46 authorizes transactions

"that are ordinarily incident and necessary to the lifting, exportation, reexportation, sale, resale, supply, storage, marketing, purchase, delivery, or transportation of Venezuelan-origin oil, including the refining of such oil, by an established U.S. entity."

A first condition of note is that the license extends only to activities of "an established U.S. entity," defined as an "entity organized under the laws of the United States or any jurisdiction within the United States on or before January 29, 2025." Non-U.S. entities will not be able to rely on the license. Nor will entities newly established in the United States within the last 12 months.

A second condition pertains to contractual governing law and forum selection clauses. Contracts concluded in reliance on the license must be governed by U.S. law and provide for dispute resolution in the United States. The license does not mandate dispute resolution in U.S. courts, leaving open the possibility of arbitration or other alternative dispute resolution seated in the United States.

A third condition concerns payments to "blocked persons," which includes the Government of Venezuela and the state-owned oil company (PdVSA) and its affiliates. A company may not pay such persons directly. Rather, it must direct payments to a specially designated account at the U.S. Treasury established by Executive Order 14373 of January 9, 2026. That order contemplates money that is property of the Government of Venezuela being held by the U.S. Treasury as custodian and ultimately being disbursed according to instructions issued by the Secretary of State. The order also purports to insulate such money from attachment or similar encumbrance by creditors of Venezuela.

A final condition concerns the tracking of sales of Venezuelan oil. A company must submit a report to the Department of State and the Department of Energy if it "exports, reexports, sells, resells, or supplies Venezuelan-origin oil to countries other than the United States." It must submit such a report within 10 days of executing the first such transaction and every 90 days thereafter.

In addition to the foregoing conditions, GL 46 imposes limitations. Most of those limitations relate to compliance with U.S. sanctions. Thus, a transaction pursuant to the license may not involve persons located in or organized under the laws of a sanctioned country (Russia, Iran, North Korea, or Cuba) (or owned or controlled by or in a joint venture with such persons). Nor may it involve blocked property or a blocked vessel.

In addition to the sanctions-related limitations, GL 46 imposes two other limitations reflective of the general direction of U.S. foreign policy. First, it prohibits "[p]ayment terms that are not commercially reasonable" (though it does not elaborate on how commercial reasonableness will be assessed) as well as certain kinds of payments (notably, crypto payments). Second, it prohibits certain transactions involving persons located in or organized under the laws of China.

Companies seeking to pursue new deals in reliance on GL 46 should undertake thorough diligence to ensure that they are complying with its conditions and restrictions. The Baker Botts Venezuela Task Force is available to answer questions and advise on compliance with GL 46.

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