OFAC Issues New Libya General License.....

for Certain Parties

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 license must 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 article is Erich Ferrari, an attorney specializing in OFAC matters. If
you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.