On September 9, 2011, the Office of Foreign Assets Control, US Department of the Treasury, issued a new General License No. 7 to the Libyan Sanctions Regulations (LSR), 31 C.F.R. 570. The new license authorizes transactions with entities owned or controlled by the Libyan National Oil Corporation (NOC), including major Libyan oil concerns such as the Arabian Gulf Oil Company (AGOCO), Harouge Oil Operations and the Ras Lanuf Oil and Gas Processing Company. The new general license provides a non-exhaustive list of 16 specific entities with which transactions are now authorized. The authorization applies to the named entities even if they appear on the Specially Designated Nationals List, as several of them do. The named authorized entities are:
- Arabian Gulf Oil Company
- Azzawiya Oil Refining Company
- Brega Petroleum Marketing Company
- Harouge Oil Operations
- Jamahiriya Oil Well Fluids and Equipment
- Libya Oil
- Mediterranean Oil Services Company
- Mediterranean Oil Services GmbH
- National Oil Fields and Terminals Catering Company
- North African Geophysical Exploration Company
- National Oil Wells Drilling and Workover Company
- Oilinvest Netherlands B.V.
- Ras Lanuf Oil and Gas Processing Company
- Sirte Oil Company for Production Manufacturing of Oil and Gas
- Tamoil Group
- Waha Oil Company
However, the new general license does not apply to the Libyan National Oil Company itself, and does not authorize transactions with other entities whose property and interests in property are blocked other than authorized owned or controlled entities. The new general license also excludes the Zueitina Oil Company, another NOC-affiliated company, from its scope. Furthermore, it is not clear that the existing license has any effect on property that has been blocked, in which the now-authorized entities have an “interest.” The general license clearly authorizes new transactions with these entities on a prospective basis, but it is less certain that the license “unblocks” property that had previously been subject to a blocking requirement.
As we described in our previous advisory on the LSR, which implemented Executive Order 13566 of February 25, 2011, “Blocking Property and Prohibiting Certain Transactions Related to Libya,” the sanctions program against Libya takes the form of a blocking regime against the Government of Libya and certain entities and individuals associated with what is now the former Gaddafi regime. The NOC and its subsidiaries, as Libyan state-owned enterprises, were subject to the LSR. Given the fluid situation on the ground, however, and the affiliation of certain such entities with the US-backed Libyan rebels, OFAC had previously issued general licenses to do business with companies opposed to the Qadaffi regime. The latest OFAC license grants a new exemption to the prohibitions imposed by these regulations.
Specifically, the new General License No. 7 comes on the heels of General License No. 6, authorizing transactions involving the Transitional National Council of Libya; General License No. 5 (discussed here), authorizing transactions related to certain oil, gas, or petroleum products; General License No. 4 (discussed here), authorizing involvement with investment funds in which there is a blocked noncontrolling, minority interest; and General License No. 1B, authorizing transactions involving third-country Libyan-owned or -controlled banks.
As events develop on the ground in Libya, we anticipate that OFAC will continue to modify the Libyan sanctions regime to expand the scope of allowable transactions with entities OFAC deems to be unaffiliated with the former Gaddafi regime.