Venezuela Could Lose Its Most-Prized Oil Asset Citgo 

The U.S. Supreme Court justices declined on Monday to review a federal court’s ruling that had allowed Canadian miner Crystallex to take over shares of U.S. refiner Citgo in compensation for US$1.4 billion for the expropriation of assets in Venezuela.  

U.S. refiner Citgo is the crown jewel in the holdings of Venezuela’s state oil firm PDVSA, but the rejection of the Supreme Court to hear Venezuela’s arguments for appeal of the previous ruling could mean that Venezuela is now even closer to losing control over Citgo than before, according to Bloomberg.

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 Juan Guaidó—the opposition leader recognized as the legitimate president by the U.S. and 50 other countries – and both are digging in over the power struggle for Venezuela’s U.S.-based refinery that rakes in US$30 billion in revenue. 

In the summer of 2019, a U.S. federal appeals court rejected PDVSA’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 the expropriation of assets in Venezuela.

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 Citgo’s U.S.-based parent company PDV Holding did not show adequate separation from the Venezuelan government, which has accrued billions in debt with multiple parties.

The Republic of Venezuela had appealed at the U.S. Supreme Court the Third Circuit court’s decision from last year to allow Crystallex to claim its compensation, saying that the seizing of Citgo shares would be a conflict under federal sovereign immunity law.

Still, Crystallex would need a U.S. sanctions waiver to execute its claim, an adviser for Juan Guaidó told Reuters last year after the court allowed it to proceed with claiming its compensation award.

By Tsvetana Paraskova for Oilprice.com

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