PDVSA creditor Crystallex International Corp. will be first in line to receive a part of the proceeds from the auction of Citgo Petroleum shares later this October, a U.S. judge has ruled.
Citgo Petroleum is PDVSA’s crown jewel refinery in the United States.
Crystallex was selected to be at the front of the pack because it was first in line to claim it was due part of the money—therefore it deserves priority, US Circuit Judge Leonard Stark said in a ruling this week.
Shares of Venezuela’s PDV Holding—the unit of PDVSA that owns Citgo—will be sold at auction in October. Crystallex says it is entitled to $1.4 billion after its gold mine in Las Cristinas, Venezuela, was seized. The matter was settled in the courts years ago, with Crystallex agreeing to the above figure.
After Venezuela made some payments to Crystallex, the remaining balance due is just under $1 billion now, the judge said.
But PDVSA seized more than just Crystallex’s gold mine, and Crystallex isn’t the only company in line with its hand out. Companies are lining up to get a piece of the mouthwatering Citgo pie to the tune of $5 billion, which is still below Citgo’s estimated valuation of more than $13 billion.
ConocoPhillips will also be near the front of the line to recoup costs associated with Venezuela’s expropriation of two of its crude oil projects.
The United States has for years protected Citgo from being broken up and sold off, and Venezuela was holding out home that its license that protects the refinery would be renewed past its July 19 expiry. The license was indeed renewed until October 19. While the auction will still take place, the U.S. will need to approve any winners.
Venezuela’s total expropriation claims are said to exceed $20 billion.
By Julianne Geiger for Oilprice.com
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