Biden Administration Extends Protections for Citgo
The Biden administration has extended temporary protections for Citgo, preventing Venezuela's national oil company from losing control of its most valuable foreign asset. This comes as an auction determining the future of Citgo's parent company is ab...
Troy D. Hanson
January 16, 2024
The Biden administration has once again extended temporary protections for Citgo, the Venezuela-owned company, from its creditors. This extension comes at a crucial time, as an auction that could determine the future of Citgo's parent company is about to begin.
The Treasury Department announced on Tuesday that the protections suspending a loophole in U.S. sanctions on Venezuela will be in effect until April 16. This particular loophole had the potential to result in Venezuela's national oil company losing control of Citgo, which is its most valuable foreign asset.
Originally put in place by the Trump administration in 2019, these protections have been routinely extended due to ongoing legal efforts by Venezuela's creditors to take control of Citgo through U.S. courts.
On January 22, a federal court in Delaware is set to receive the first round of bids for shares in Citgo's parent company, PDV Holding. This auction is expected to be concluded in July.
The legal action that led to this planned auction was initiated by Venezuela's creditors. They argue that PDVSA, the national oil company of Venezuela, is under such control by President Nicolas Maduro that its assets, including Citgo's parent company, can be seized to settle debts and arbitration awards that the country has refused to pay.
Meanwhile, another group of creditors is pursuing legal action over Venezuela's default on a bond in 2019. This bond utilized shares of PDV Holding as collateral.
Overall, the situation surrounding Citgo and its parent company remains uncertain. However, with the extension of temporary protections by the Biden administration, the company can continue to navigate through these legal challenges for now.
Venezuelan Opposition Seeks Settlement Options Amid U.S. Sanctions
Venezuela continues to face U.S. sanctions as a result of the disputed 2018 presidential election. The United States has been backing the Venezuelan opposition in an effort to pressure President Maduro into agreeing to hold free and fair elections.
In a recent development, the Treasury Department has modified sanctions on Venezuela, allowing creditors to engage in negotiations with the Venezuelan opposition. Currently controlling the Citgo board, the opposition has expressed their willingness to pursue a settlement.
Citgo, a major Venezuelan petroleum company, operates three refineries located in Texas, Louisiana, and Illinois. These refineries have a combined capacity of nearly 750,000 barrels per day, and Citgo also possesses product terminals and pipelines.
However, targeting PDV Holding, the parent company of Citgo, to recover Venezuela's debts is complex. Uncertainty surrounds whether the estimated value of Citgo and its assets, exceeding $10 billion, would be sufficient to satisfy multiple creditors.