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The US Treasury Department said Friday that transactions between non-US firms and PDVSA. Venezuela`s state-owned oil firm. which involve the US financial system or US commodity brokers would be prohibited after April 28.
In a series of answers to `Frequently Asked Questions.` Treasury`s Office of Foreign Assets Control clarified that these non-US entities had three months to wind down these transactions with PDVSA. indicating US sanctions on Venezuela`s oil sector may be more extensive than many analysts initially thought.
But these sanctions are not secondary sanctions. explicitly prohibiting oil and product trade between PDVSA and foreign firms. sources said.
`While it superficially looks like secondary sanctions. my understanding is that it means third parties can`t use dollars. not that they can`t trade in non-dollar currencies.` said Kevin Book. a managing director with ClearView Energy Partners. `It wouldn`t surprise me. however. if Treasury wrote it this way as sort of a high inside pitch for those who might be looking for an end-around.`
In the FAQ document Friday. Treasury`s OFAC also explicitly prohibited swap transactions. under which US refiners would buy Venezuelan crude sold by PDVSA through a third party.
`It is certainly clarifying that this category of trade cannot occur.` said Elizabeth Rosenberg. director of the energy program at the Center for a New American Security and a former senior sanctions adviser at the Department of the Treasury. `I don`t think this was a loophole more than it was an area of enormous confusion for the last couple of days.`
But Treasury Friday did not provide additional clarity on US shipments of diluent. which were subject to an immediate prohibition Monday.
PDVSA uses naphtha from the US to thin its heavy crude so it can be shipped.
Several US shippers had diluent shipments in process to Venezuela when sanctions were announced Monday. and those shipments have been left in limbo since. according to Ginger Faulk. a partner with the Eversheds Sutherland law firm.
The US ships about 120.000 b d of petroleum products to Venezuela. according to S&.P Global Platts Analytics. and exports about 50.000 b d of naphtha to Venezuela. according to Nicolas Daher. an oil analyst at FGE.
Losing access to US diluent would put between 200.000 and 250.000 b d of Venezuelan oil production at risk. Daher said.
Under the new sanctions. US refiners will be permitted to continue to import Venezuelan crude. at least for three months. but payments for these crude shipments must be deposited into a blocked. interest-bearing account located in the US until Venezuelan President Nicolas Maduro leaves office. a requirement which is expected to immediately shut down crude flows between Venezuela and the US.
