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CITGO in limbo, Crystallex wins
again in bid to seize shares

Erick Gay/AP

Citgo still in limbo as judge approves sale of Venezuelan holding company's shares.

- Trump has sought to delay seizure; could soon be up to Biden
- ConocoPhillips, other PDVSA creditors could be impacted

By Jordan Blum/Platts

Petroleumworld 01 18 2021

The fate of US refiner Citgo Petroleum remains in limbo following a federal court ruling late Jan. 14 that reaffirms the eventual auction of shares of Citgo's Venezuelan holding company.

US District Judge Leonard Stark in Delaware dismissed Venezuela's motion to delay the sale of Citgo shares to one of its creditors, Crystallex International, a now-defunct Canadian mining firm. The ruling further helps open the door for Crystallex or other Venezuelan creditors that have won arbitration awards, such as ConocoPhillips, to make claims for Citgo, which is Venezuela's state-owned oil company's most valuable international asset.

However, the Trump administration has long sought to delay such an auction of Citgo shares in order for the Venezuelan opposition administration, led by self-declared interim President Juan Guaidó, to maintain its current control of Citgo. Venezuelan President Nicolas Maduro has sought to take back the Citgo leadership.

Any creditor currently seeking to seize Citgo assets needs specific approval from US Treasury's Office of Foreign Asset Control, and there's currently a ban on doing so in place until Jan. 19, the day before President-elect Joe Biden is sworn into office. That expiration of that ban had recently been extended from October 2020.

So, the next decision could be left up to the Biden administration unless action is taken in the next few days.

The Treasury Department did not immediately respond to a request for comment.

Stark's ruling ordered Crystallex and Citgo's parent, a registered Delaware company called PDV Holdings, to confer on how the court should proceed with the share sale. PDV is owned by the Venezuelan state oil firm PDVSA.

"Each day that Crystallex does not recover on its judgment is arguably something of an affront to the United States judicial system," Stark wrote. "Those days must soon come to an end."

Citgo, a Houston-based company with a more than 100-year history, was acquired by PDVSA more than 30 years ago and owns oil refineries in Corpus Christi, Texas; Lake Charles, Louisiana; and Lemont, Illinois. Citgo also owns transportation, marketing and retail fueling businesses.

A federal appeals court previously ruled in 2019 that Crystallex, which was owed $1.4 billion by Venezuela, may seize the Citgo shares to satisfy its arbitration claims. If that auction of shares goes forward, other US refiners could jump in as the highest bidders for Citgo assets. PDVSA previously paid Crystallex nearly $500 million in 2018 but couldn't satisfy the rest of the debt. Crystallex then opted to move forward legally to seize the shares of Citgo.

Citgo is a profitable business, but US sanctions prevent Citgo's earnings from being repatriated to Venezuela.

"This case has been heavily litigated for years, in multiple courts, and Crystallex has prevailed at every step," Stark wrote in the Jan. 14 ruling. "It has done so by defeating every material argument raised in opposition to the relief that it has obtained."


By Jordan Blum from S&P Global Platts
01 15 2021



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