New OFAC General License Opens Door To Venezuelan Oil For U.S. Entities

Key Takeaways:

• U.S. entities can now trade in Venezuelan oil without violating the Venezuela Sanctions Regulations. The Department of the Treasury's Office of Foreign Assets Control ("OFAC") has issued a general license authorizing transactions "ordinarily incident and necessary to" the lifting, transport, and sale of Venezuelan-origin oil by "established U.S. entities," subject to certain conditions and reporting requirements.
• Payment terms must be commercially reasonable. While OFAC has not defined what makes terms "commercially reasonable," it expressly excludes certain terms, such as debt swaps, payments in gold, and payments in Venezuelan state cryptocurrency.
• Transactions involving certain persons and entities remain prohibited. OFAC expressly has not authorized certain involvement, be it direct or indirect, of persons located in or entities organized under the laws of Russia, Iran, North Korea, Cuba, and the People's Republic of China.

On January 29, 2026, OFAC issued General License No. 46 ("GL 46"), authorizing certain transactions that would otherwise be prohibited under U.S. sanctions on Venezuela, including transactions that involve the Government of Venezuela, the state oil company Petróleos de Venezuela, S.A. ("PdVSA"), and PdVSA's subsidiaries. This development has been widely anticipated by the oil and gas industry following the Trump administration's pledge to make Venezuelan oil available to U.S. entities.

GL 46 authorizes such transactions provided they are "ordinarily incident and necessary" to the lifting, transport, export, storage, or sale of Venezuelan-origin oil by an established U.S. entity, including the arrangement of shipping logistics, marine insurance, and terminal services—including at Venezuelan ports. However, several important conditions apply:

1. The authorization extends only to activities by an "established U.S. entity," defined as an entity organized under U.S. law on or before January 29, 2025. This means that U.S. entities created within the past year (or to be created in the future) are not eligible to participate.
2. Any contract with the Government of Venezuela, PdVSA, or PdVSA's subsidiaries must be governed by U.S. law, and any dispute resolution must occur in the United States.
3. Any monetary payment to a blocked person (including Venezuela and PdVSA) must be made into the Foreign Government Deposit Funds established by Executive Order 14373, or another account as directed by the U.S. Department of the Treasury. This mechanism ensures that the U.S. will control the further disposition of the proceeds of these transactions.
4. Persons that export or sell Venezuelan-origin oil to countries other than the United States must report such transactions to the U.S. Department of State and Department of Energy. This language is broad and captures downstream resellers of Venezuelan-origin oil. In addition, parties engaging in the export, sale, or re-sale of Venezuelan-origin oil must comply with specific record-keeping and specific agency reporting requirements outlined in GL 46 that identify: (i) the parties involved; (ii) the quantities, values, and countries of ultimate destination; (iii) the dates the transactions occurred; and (iv) any taxes fees, or other payments provided to the Government of Venezuela.

GL 46 expressly does not authorize certain payment terms and transactions. The license does not authorize payment terms that involve debt swaps; payments in gold; payments in digital currency issued by or for the Government of Venezuela, including the defunct petro coin; or other payment terms that are not "commercially reasonable." It also does not authorize transactions involving persons located in or entities organized under the laws of Russia, Iran, North Korea, or Cuba, or any entity owned by, controlled by, or in a joint venture with such persons. Likewise, transactions involving Venezuelan or United States entities that are owned by, controlled by, or in a joint venture with a person located in or organized under the laws of the People's Republic of China are not authorized. Finally, GL 46 also does not authorize transactions involving blocked vessels or the unblocking of any property blocked under the Venezuela Sanctions Regulations.

While questions remain concerning some of GL 46's specifics—particularly concerning how OFAC will apply the phrase "commercially reasonable," which is not defined in the license—the license nevertheless marks a substantial step forward in the opening of the Venezuelan oil market to U.S. actors. Foley Hoag's International Trade & National Security practice group continues to monitor developments related to the Venezuela sanctions and is available to assist clients with questions regarding GL 46 and related compliance matters.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.