OFAC Issues General License 47 to Authorize the Sale of US-Origin Diluents to Venezuela, Complementing Recent Authorization Related to Venezuelan-Origin Oil

Key Points

• On February 3, 2026, the U.S. Department of the Treasury’s OFAC issued GL 47 to authorize a range of transactions related to the sale of U.S.-origin diluents to Venezuela otherwise prohibited under U.S. sanctions, including such transactions with GoV, PdVSA or PdVSA Entities, all of which remain blocked.
• Because diluents are essential for the production of Venezuelan crude oil, which is particularly heavy (i.e., highly viscous and dense), GL 47 contributes to the Trump administration’s efforts to stabilize Venezuela’s economy through oil sector operations.
• As discussed in a recent Akin client alert, GL 46, which OFAC issued last week to authorize certain oil sector activities, only allows the supply of diluents as payment in the form of swaps for authorized purchases of Venezuelan-origin oil.
• The sale of diluents authorized by GL 47 may also help support additional oil-sector sanctions relief measures, including a potentially forthcoming GL authorizing transactions related to upstream oil exploration and production.
• GL 47 includes conditions and exclusions related to contracts, payment terms, entities with certain affiliations to specified countries and reporting requirements.

Overview of GL 47

Scope of Authorization

Subject to certain conditions and exceptions, General License (GL) 47 authorizes—without any time limitation—all transactions that are ordinarily incident and necessary to the exportation, reexportation, sale, resale, supply, storage, marketing, delivery, or transportation of U.S.‑origin diluents to Venezuela, provided that any contract with the government of Venezuela (GoV), state-owned oil company Petróleos de Venezuela, S.A. (PdVSA) or entities in which PdVSA owns, directly or indirectly, a 50% or greater interest (PdVSA Entities) for covered transactions specifies that (i) it is governed by U.S. law and (ii) any dispute resolution under such contract occur in the United States. GL 47 clarifies that this authorization covers processing of payments and certain transactions related to the maritime transport of U.S.-origin diluents.

Exclusions

The authorization excludes any transaction involving:

• An individual or entity located in or legally organized under the laws of Iran, North Korea or Cuba, or certain affiliated entities (i.e., any entity that is owned or controlled, directly or indirectly, by or in a joint venture with such individuals and entities).
• A blocked vessel.

Further, GL 47 does not authorize:

• Payment terms that are not commercially reasonable, involve debt swaps or payments in gold, or are denominated in digital currency, digital coin or digital tokens issued by, for, or on behalf of GoV, including the petro.
• The unblocking of any property blocked pursuant to the Venezuela Sanctions Regulations, except as provided within the authorization language.

Reporting Obligation

GL 47 requires any person that exports, reexports, sells, resells or supplies U.S.-origin diluents to Venezuela pursuant to the authorization to provide a detailed report to the U.S. State Department and the U.S. Energy Department that includes the parties involved and other information for each transaction. The first report is due 10 days after execution of the initial covered transaction, with subsequent reports required every 90 days while such transactions are ongoing.

Analysis of Key Issues

Definition of “US-Origin”

GL 47 authorizes activity with respect to diluents that are “U.S.-origin,” but it does not define this term. Future guidance may clarify whether “U.S.-origin” in this context excludes diluents that have been incorporated or substantially transformed into other products outside of the United States. See, e.g., sections 205 and 407 of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560.

Whatever interpretation of “U.S.-origin” applies, to the extent that non-U.S.-origin diluents are used as commercially reasonable payment in the form of a swap, e.g., as an in-kind exchange for the sale of Venezuelan oil, such transaction would be authorized by GL 46, to the extent the conditions of that authorization are satisfied.

Definition of “Diluents”

GL 47 does not define the term “diluents” for purposes of the authorization, and the Office of Foreign Assets Control (OFAC) has not yet issued public guidance doing so. As discussed in Akin’s recent client alert regarding GL 46, OFAC cross-referenced the U.S. Energy Information Administration (EIA) “Glossary” for the definition of another energy sector term used in Venezuela GL 40C (see Frequently Asked Question 915 in relation to the definition of the term “liquified petroleum gas”). If OFAC takes a similar approach for GL 47, the EIA Glossary defines “diluents” as follows: “A blend of light hydrocarbons used to change properties of very heavy hydrocarbons (extra heavy crude oil, bitumen, etc.) to make it easier to transport and process. Diluents lower viscosity and pour point and raise surface tension to move heavy crude oils through pipelines more easily. The diluted blend can then be processed at lower cost and in a wider variety of refineries. Diluent can be obtained from refineries, natural gas processing plants or production wells, and may consist of natural gasoline, light crude oil, condensates, pipeline transmix and other light hydrocarbons.”

Applicability to Non-US Parties

Unlike GL 46, the language of GL 47 does not explicitly require the involvement of an “established U.S. entity.”

US Governing Law & Dispute Resolution and Commercially Reasonable Payments

The language related to governing‑law and dispute‑resolution requirements and to “commercially reasonable payments” raises questions similar to those discussed in Akin’s recent client alert regarding GL 46. Specifically, it is unclear whether:

• The governing-law and dispute-resolution requirements apply to any underlying agreement supporting the authorized dealings or only to agreements entered into between the party engaging in the activities described in GL 47 and the GoV, PdVSA or PdVSA Entities.
• The exclusion related to payment terms that are not commercially reasonable applies to payments executed at non-market prices per se, or if instead specific pricing benchmarks should apply.

Exception for Unblocking of Property

GL 47 authorizes the unblocking of property blocked pursuant to the Venezuela Sanctions Regulations, 31 C.F.R. Part 591, to the extent “provided in paragraph (a)” of the license. However, the scope of this authorization, and the circumstances under which it applies, remain unclear.

US Policy Considerations and Risks

By broadly authorizing sales of U.S.-origin diluents to Venezuela, GL 47 supports the policy goals reflected in GL 46 and other U.S. actions since Nicolás Maduro’s removal from power. Specifically, an increase in the supply of diluents to Venezuela will enhance the ability of parties seeking to engage in operations authorized by GL 46 to lift and transport oil that has accumulated in quantities at the limit of Venezuela’s storage capacity.

Further, a broader supply of diluents could pave the way for additional sanctions relief measures with respect to upstream oil exploration and production, in furtherance of economic recovery in Venezuela and rebuilding of the country’s economy. However, companies seeking to engage in transactions authorized by GL 46 or GL 47 should bear in mind the conditions and exclusions which these authorizations include, as well as the absence of any guarantee that they will remain in effect indefinitely.

It is noteworthy that GL 47 lacks certain conditions and exclusions included in GL 46. For example, under GL 47 companies can receive payment for the sale of diluents through normal banking channels; companies need not be “established U.S. entities” to make use of the authorization; and entities linked to China or Russia are not subject to exclusions (although companies should bear in mind other prohibitions that may apply to such entities). The absence of these exclusions may reduce some compliance hurdles for certain companies. However, companies that rely on GL 47 should anticipate regulatory scrutiny, as the inclusion of a reporting requirement in the license suggests that the Trump administration may seek to closely monitor their activities.