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Crystallex, the Canadian mining company that years ago won a $1.4-billion arbitration against Venezuela’s PDVSA has urged a district judge to set a date for the sale of U.S. refiner Citgo’s parent company, Mining.com reports.
Judge Leonard Stark is the justice that is looking into Crystallex’s dispute with PDVSA over the arbitration, which Venezuela has refused to acknowledge and to pay. The mining company has been pushing for the sale of Citgo for some time now and last year won when Judge Stark ruled Citgo was not separate from the Venezuelan state: an important decision that legitimized Crystallex’s claims that it was owed compensation for the nationalization of its Venezuelan assets and it could get it from the sale of Citgo.
The ruling by Judge Stark was unique: government assets such as Citgo’s parent, PDVSA, are as a rule protected from lawsuits targeting a state. Yet in Stark’s ruling, the judge said that Venezuela had blurred the lines between the government and the state oil firm, with a military official at the helm of PDVSA.
Even if the court has ruled in favour of Crystallex, the miner is yet to get what it wants. None other than the U.S. government, the strongest opponent of the Maduro government, is against the sale of Citgo, or rather its parent, PDV Holdings. Last November, the Treasury said it would not allow any claimants for compensation from Venezuela to try and seize Citgo assets.
Earlier this year, Washington issued another warning against claimants trying to seize Citgo. It asked Judge Stark to not grant Crystallex the right to sell the shares of PDV Holdings because such a move would have a negative impact on U.S. foreign policy and national security interests. Now, the judge has asked whether he should take into consideration this warning when deciding whether to set a date for the sale of PDV Holdings shares in January, Mining.com’s Valentina Ruiz Leotaud reports.
The situation is sticky: half of Citgo is owned by Rosneft, after PDVSA pledged the stake as collateral for a loan. The other half of the refiner is collateral for a bond that matures this year and one that PDVSA has already defaulted on. The maturity date for the bond is October 27. If it comes and goes without a payment, the new owners of 50.1 percent of Citgo would be a group of institutional investors.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.