Venezuela suspends 19 oil and gas production-sharing contracts
Contracts are under joint Venezuelan and U.S. administrative review, including company credential checks and consideration of recommendations to revoke some contracts. PDVSA is continuing to sell crude produced under the suspended contracts and national oil and gas output remains unchanged so far.
Change
Venezuela suspended 19 oil and gas production-sharing contracts, and state oil company PDVSA is selling the crude produced under those suspended agreements.
Why it matters
The suspension freezes the legal standing and operational authority of the affected contracts, putting those projects on hold pending formal review. Venezuela and the United States are examining the credentials of contract holders, and a reformed hydrocarbon law gives Caracas six months to decide whether to revoke agreements.
Implications
- — Contract-holding oil and gas companies' legal and compliance teams must submit credentials and documentation to Venezuela's ministries and U.S. authorities during the six-month review or face possible revocation of their contracts.
- — Trading desks at oil trading firms and refiners that purchase Venezuelan crude must obtain specific clearances from the U.S. Treasury's Office of Foreign Assets Control before transacting oil produced under the suspended contracts or risk sanctions-related non-compliance.
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