The U.S. is no longer protecting CITGO Petroleum from seizure, backing a forced sale of the company to satisfy Venezuela’s foreign creditors, according to a Wall Street Journal report.
CITGO has been protected by the U.S. Treasury Department for three years from creditors with claims against the company. However, now that the U.S. is backing down, claims can be settled by negotiation or through an auction of shares in CITGO parent PDV Holding.
Businesses like Crystallex International have targeted CITGO as the only valuable state asset they can seize through the U.S. court system as compensation for billions of dollars in unpaid claims.
The U.S. gave control of CITGO to Venezuelan opposition leaders in 2019 as part of a pressure campaign against the country’s president, Nicolás Maduro, while imposing sanctions that prohibited bondholders and other creditors from foreclosing on the company, the report stated.
The report also stated that any change in CITGO’s control requires a license from the Treasury Department’s Office of Foreign Assets Control (OFAC), which said last year that ending the company’s Venezuelan ownership to repay creditors would undercut the U.S. interest in supporting Venezuela’s opposition movement. OFAC also plans to implement a licensing policy for license applications in connection with the execution of a sale.
The U.S. government plans to approve the sale of Venezuela’s ownership stake in CITGO once a winning bidder emerges in a court-supervised auction process. Marketing the company to potential bidders should begin immediately now that the U.S. has backed down.
CITGO has not yet commented on the situation.
CITGO Petroleum Corp. operates under the well-known CITGO brand. CITGO owns and operates three refineries located in Lake Charles, La.; Lemont, Ill.; and Corpus Christi, Texas, and wholly and/or jointly owns 38 active terminals, six pipelines and three lubricants blending and packaging plants. With approximately 3,300 employees and a combined crude capacity of approximately 769,000 barrels-per-day (bpd), CITGO is one of the most complex independent refiners in the U.S.