Despite winning a court battle that it can use shares of PDVSA's U.S. refiner Citgo to claim compensation from Venezuela, Canada-based gold mining group Crystallex International would need a U.S. sanctions waiver to execute the claim, an adviser for Venezuela's opposition leader Juan Guaidó told Reuters this week.
PDVSA's control of its U.S.-based subsidiary Citgo Petroleum now hangs in the balance after a U.S. federal appeals court rejected on Monday Venezuela's state-owned oil company's appeal to knock down an earlier court order that allowed Crystallex to take over Citgo shares in compensation for US$1.4 billion for expropriation of assets in Venezuela.
The court ruling from earlier this week "clearly establishes that Crystallex will need a license to be able to execute the asset," Guaidó's adviser Alejandro Grisanti told Reuters in an interview.
Venezuela has long argued that Citgo should be immune from the billions in debt that Venezuela has accrued on the grounds that they are two separate entities, but U.S. courts disagree, ruling that PDVSA and PDVH did not show adequate separation from the Venezuelan government, which has accrued billions in debt with multiple parties.
"The District Court acted within its jurisdiction when it issued a writ of attachment on PDVSA's shares of PDVH to satisfy Crystallex's judgment against Venezuela, and the PDVH shares are not immune from attachment," Judge Leonard Stark wrote in the judgment.
The ruling also says that "According to a Treasury Department Frequently Asked Question, any attachment and execution against PDVSA's shares of PDVH would likely need to be authorized by the Treasury Department."
Citgo Petroleum Corp is one of the largest oil refineries in the United States. Its current operations are managed by two dueling boards of directors-one appointed by Nicolas Maduro and one appointed by Guaidó, and both are digging in over the power struggle for Venezuela's U.S.-based refinery that rakes in US$30 billion in revenue.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More