PDVSA Sanctions Threat Could Curb Tanker Upside
US SANCTIONS targeting Venezuela’s state-owned Petróleos de Venezuela appear positive for tankers from a tonne-mile perspective: Venezuelan crude would theoretically be redirected from the US to India and China, and US product flows to Venezuela would be supplanted by cargoes from further afield.
According to Matthew Thomas, a partner at law firm Blank Rome, the US Treasury Department’s Office of Foreign Assets Control (OFAC) “looks at transactions as a whole and if you are a US person and you are providing part of a service in connection with the transaction, even if the title passes when the oil hits the flange on your vessel, OFAC would still view that as a transaction in which PDVSA has an interest”.
“Issuing securities in the US or being US-traded doesn’t make you a US person for sanctions purposes, however, foreign issuers can face SEC disclosure requirements if they’re dealing with US sanctions targets, which ensure investors are aware that these issuers are dealing with a sanctions target,” noted Mr Thomas.
“Sometimes, those companies will have restrictions based on agreements with investors, credit facilities, or with other financing sources. If you’re in New York raising money, a lot of people you talk to will say, ‘We want commitments you’re not dealing with any of these high-risk folks’. So, it might not be illegal, but it may be limiting.”
"PDVSA Sanctions Threat Could Curb Tanker Upside," by Greg Miller was published in Lloyd's List on January 30, 2019.