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Briefing: What the US' Venezuela Oil Sanctions Do

LexisNexis Newsdesk Oil Daily

11 Feb 2019

Morrison & Foerster counsel Michael V. Dobson discusses the sanctions Washington imposed against Venezuela in a LexisNexis Newsdesk Oil Daily article entitled “Briefing: What the US' Venezuela Oil Sanctions Do.”  The sanctions are designed to prevent embattled Venezuelan President Nicolas Maduro, whom the US and dozens of other countries no longer recognize, from accessing cash that crude sales bring in.  So far, the sanctions have been successful: just over a week after sanctions were introduced, Venezuela's roughly 600,000 barrels per day of exports to the US, the government's biggest revenue earner, have ground to a halt.  Whether that revenue cutoff triggers a quick resolution to Venezuela's political standoff -- which sees National Assembly leader and self-declared interim President Juan Guaido vying to replace Maduro -- is another question

Non-US oil firms can work with PDVSA without falling afoul of US sanctions, but their entire operation has to avoid the US financial system and any US subsidiaries, employees or contractors, further complicating getting paid for the work in a country where that is already a problem. European firms especially could in theory face legal issues in their home countries as well, now that Spain and France -- but not Italy -- have recognized Guaido.

Dobson said it's difficult to imagine European governments going after their oil firms in the same way, especially those that have been under pressure from the US' Iran sanctions. 

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