US Continues Sanctions Break For Swedish Refiner With Venezuelan Ties

The Treasury Department's Office of Foreign Assets Control (OFAC) on Oct. 17 extended a general license exception to allow U.S. companies to continue doing business with a Swedish oil refiner that is 50% owned by Venezuela's state oil company.

Petrόleos de Venezuela S.A. (PdVSA) was placed on OFAC's Specially Designated Nationals and Blocked Persons List on Jan. 28, 2019, for its alleged role in providing financial support to President Nicolás Maduro's regime.

Under the sanctions, all property and interests in property of PdVSA subject to U.S. jurisdiction are blocked and U.S. persons are generally prohibited from conducting business with the oil company. However, OFAC has issued general licenses that authorize certain transactions and activities related to PdVSA and its subsidiaries within specified time frames.

One of those general licenses covered Stockholm-based Nynas AB, which is a 50% joint venture with PdVSA. Nynas refineries in Europe import Venezuelan crude and refine it into specialty oils for use in asphalt and as lubricants.

In its 2018 annual report, Nynas acknowledged the U.S. sanctions "affected PdVSA's ability to supply Nynas with the agreed volumes of crude oil that we rely on to make our products."

"The sanctions target new financial debt where a U.S. person or USD are involved," the company added. "They do not target any commercial purchases of crude oil from Venezuela or sale of any product derived thereof, but indirectly the U.S. sanctions on Venezuela are causing non-recurring costs for both bitumen and naphthenics supply and higher product costs for alternative more expensive external sources."

This is the fourth time that OFAC has extended the general license, known as General License No. 13, for Nynas AB. The new General License 13D is valid from Oct. 17, 2019, to April 14, 2020.

The Trump administration has endorsed Interim President Juan Guaidó, who has been blocked by the Maduro regime from taking office since earlier this year. The U.S. government has since turned up trade sanctions targeting financial transactions and exports to Venezuela to pressure Maduro to leave office.

However, the Trump administration said it would remove the sanctions against Venezuela once the Maduro regime exits power.

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