Nynas freed from US sanctions on Venezuela: Update

Swedish speciality products refiner Nynas has been released from US sanctions following a reorganisation that has cut Venezuelan state-owned PdV's stake in the firm.

PdV has reduced its shareholding in Nynas to 15pc from 50.1pc. The divested stake is now controlled by an independent Swedish foundation. Finland's Neste owns the balance.

Nynas first came under US sanctions in August 2017, and in October 2019 additional sanctions prevented it from bringing in the Venezuelan heavy crude it often uses in its refineries. The firm began a reorganisation in December after it was unable to repay debts.

"This means an end to many years of having to carry the unfair burden for a Swedish company of being subject to US sanctions," said Nynas president Bo Askvik. "This led to an increasingly deteriorating financial situation, which ultimately forced Nynas into reorganisation at the end of last year. Our focus now is to successfully end the ongoing reorganisation process and having exited sanctions, Nynas will be able to return to normal trading conditions and secure long-term financing."

Nynas operates four refineries in Europe, at Nynashamn and Gothenburg in Sweden and Harburg in Germany. It also operates the Eastham refinery in the UK in a joint venture with Shell. The refiner produces base oils, bitumen, process oils, transformer oils and tyre and rubber oils.

Nynas has agreed to an ongoing reporting requirement with the US Treasury Department's Office of Foreign Assets Control (OFAC) regarding any future changes to its shareholders and board for as long as PdV is designated under US sanctions.

Controversy at home

In Venezuela, PdV's divestment has sparked controversy in the US-backed political opposition, which controls PdV's US assets. The oil company's dwindling portfolio of other overseas assets, including the remaining 15pc in Nynas, remain in the hands of the US-sanctioned government of President Nicolas Maduro.

The office of special attorney general Jose Ignacio Hernandez, a key member of opposition leader Juan Guaido's Western-recognized interim administration run by exiles, urged the opposition-controlled National Assembly to investigate the transaction.

"This restructuring was conducted along with authorities designated by the Nicolas Maduro regime, as a result of which, the Office of the Special Attorney General has recommended the National Assembly to initiate the corresponding investigation."

By reducing PdV's stake to less than 50pc, Nynas ceased to be a PdV subsidiary subject to US sanctions, allowing the company to "circumvent the application of the sanctions program," the special attorney general's office said in a statement.

National Assembly deputy Elias Matta, who heads the body's oil commission, asked on social media how much money the regime received for the shares, and asserted that the agreement is not transparent, and is void because it lacks the constitutionally mandated assembly approval.

PdV has not commented on the transaction.

Sweden is a member of the EU, which recognizes Guaido's interim presidency to the detriment of the Maduro's government.

By Sam Balf and Patricia Garip