Standard Club reports that the Venezuelan Maritime Authority has required port payments to be in its own digital Petro Currency, which is sanctioned by the US.
The Petro was launched in early 2018 by the Maduro government in Venezuela. It is claimed to be ultimately backed by the country’s oil reserves. Venezuela was thought to have attempted to create it to sidestep US sanctions, which made trade in US dollars difficult. Trade in Venezuelan currency is basically impossible, given the country’s rampant inflation.
However, in March 2018 the US banned any ‘United States person’ or person ‘within the United States’ from dealing in any digital currency issued by the government of Venezuela, which includes the Petro, as part of EO 13827,
The US Executive Order contained a further provision which prohibited any transaction ‘that evades, or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate’ of the primary sanction. This further wording is not specifically limited to persons and entities falling within US jurisdiction. Standard Club said that it was “therefore possible that the secondary provision might sanction a non-US entity which causes a US entity, such as a bank processing US Dollars, to deal in the Petro currency”.
The Maduro government has decreed that various ‘decentralized’ services and entities in Venezuela now charge for services in Petros (Decree 4096 dated January 14th). This Decree extends to the Institute of Aquatic Spaces (INEA), which acts as the maritime authority in Venezuela. This means that services including ‘pilotage, towage, launch service, re-floating services, custody and logistic launches provided to foreign flagged vessels’ may have to be paid, at least in part, in Petros.
Standard Club observed that this was not the first time that payment for maritime services in Petros had been proposed in Venezuela, preciously without success. This time round, payment infrastructure for the Petro has been put in place, which the Club said made it more likely that the requirements in the latest Decree would be enforced. “In particular, the club understands that local shipping agents must now register for the ‘PetroApp’ and that, in due course, INEA intends to receive payments through this system in Petro currency”, the Club said.
It recommended that trade to Venezuela should be considered carefully in light of the above developments. “Given the direct conflict between local Venezuelan requirements and US sanctions, members who are unsure of their position are strongly recommended to take legal advice”.