GL44 Explained: The License That Enables Venezuela Trading

General License 44 (GL44) is the primary OFAC authorization that enables financial transactions related to Venezuelan debt. Understanding its scope is essential for anyone following the restructuring.

What GL44 Authorizes

GL44 authorizes certain transactions related to oil or gas sector operations in Venezuela, including:

Production, lifting, sale, and exportation of oil or gas from Venezuela

Payment of invoices for goods or services related to oil/gas operations

Delivery of oil and gas to creditors for debt repayment

Secondary market trading in Venezuelan debt securities

History

October 2023: OFAC issued GL44 as part of sanctions relief following political agreements between Maduro and opposition

April 2024: OFAC issued GL44A, revoking most provisions after Maduro failed to meet democratic commitments

2024-2025: Various amendments and wind-down provisions implemented

Current Status

The current GL44A authorizes wind-down of previously authorized transactions and limited ongoing activities. Secondary market bond trading remains permitted, enabling the price discovery that allowed bonds to rally on Maduro's arrest.

Post-Maduro Outlook

The political transition creates significant uncertainty about sanctions policy:

Sanctions Relief Scenario: If the Rodriguez government is recognized and cooperates with US interests, comprehensive sanctions relief could follow. This would enable direct debt restructuring negotiations, allow new oil sector investment, and potentially permit debt-for-equity swaps.

Continued Restrictions Scenario: If the transition is contested or Rodriguez government resists US preferences, sanctions could remain or tighten. This would limit restructuring options to secondary market solutions, constrain oil production recovery, and reduce ultimate recovery values.

Continuation Scenario: If Treasury maintains current restrictions during a transition period, the current patchwork of specific licenses continues. Key licenses include GL41 (Chevron-specific authorization), GL8M (Humanitarian transactions), and various specific licenses for individual companies.

Practical Implications

For creditors, GL44's scope affects ability to receive payments in any restructuring, permissibility of settlement negotiations, trading in secondary markets, and participation in enforcement proceedings.

Any comprehensive restructuring will require specific OFAC authorization beyond current general licenses.