US gives non-US firms three months to wind down PDVSA deals

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."

Read the full article and more in S&P Global Platts.