The United States Department of the Treasury Office of Foreign Assets Control (OFAC) has promulgated a new general license for U.S. persons to engage in transactions with or involving Qatar Petroleum or the Vitol Group of companies, if those transactions are related to oil, gas, or petroleum products exported from Libya under the auspices of the Transitional National Council of Libya (TNC). There is a caveat, however; these transactions are only allowed so long as no party blocked pursuant to the Libya Sanctions receives a benefit from the transactions. Furthermore, there is a caveat within the caveat in that the Arab Gulf Oil Company may receive a benefit from these transactions in certain circumstances.
Those engaging in transactions authorized under this new general licensemust submit a report to OFAC within 30 days of those transactions describing the due diligence efforts undertaken to ensure that no blocked party received a benefit from the transactions.
In a separate Statement of Licensing Policy, OFAC has declared that specific licenses will be granted on a case by case basis to trade in or support trade in hydrocarbon fuel exported under the auspices of the TNC. Those seeking to obtain specific licenses for such activities are to follow the licensing procedures set forth in Part 501 of Title 31 of the Code of Federal Regulations. As such, those applying for specific licenses to engage in such transactions will be required to provide details about the transactions, the parties involved in the transactions, the financing of the transactions and the due diligence efforts to be taken to ensure that blocked parties will not receive any benefit from the transaction.
I think this move by OFAC is interesting. At the outset of the conflict in Libya, President Obama, through OFAC instituted sanctions which were meant to cripple the financial backbone of Qaddafi’s regime. Now it seems that not only are they sanctioning Qaddafi, but they are also opening up the sanctions to make it easier and more attractive to do business with those opposing the Qaddafi regime in this conflict. In essence, sanctions in this case are not only restricting a target, but are also being selectively eased to assist the target’s opponent.
The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or firstname.lastname@example.org.