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Venezuela’s Citgo Dismisses Report It Considers Bankruptcy

One of the large refiners in the U.S., Citgo Petroleum, owned by Venezuela’s state oil company PDVSA, has denied a report that it was considering filing for bankruptcy, among other options, to protect itself from competing claims over its governance amid the ongoing crisis in Venezuela.

On Thursday, The Wall Street Journal reported that a bankruptcy filing was one of the options that Citgo Petroleum is considering. Such filing is neither imminent nor certain, but could be a way to protect Citgo’s operations on the U.S. Gulf Coast and keep them running, The Journal reported, quoting people familiar with the matter.

According to the WSJ report, a potential bankruptcy filing could provide some period of calm, but it could also prompt many creditors to start encroaching Citgo to claim repayments. One of those is Russia’s oil giant Rosneft, which has extended a loan to PDVSA. The Venezuelan state oil firm used 49.9 percent in Citgo as collateral for that loan, and if it defaults on the loan, Rosneft could claim that stake in Citgo.

“Citgo has no intention of entering into bankruptcy proceedings,” a spokesman for the company wrote in an email to Reuters after The Journal published its report.

“We continue to maintain a strong balance sheet, flat debt levels and liquidity of more than $1 billion into the new year,” the spokesman added.

Amid the political impasse in Venezuela, opposition leader Juan Guaidó—whom the U.S. backed last week as the legitimate president—was said earlier this week to be preparing to announce new boards of directors for PDVSA and Citgo.

Guaidó has ordered Venezuela’s congress to appoint new boards at the two companies, Reuters reports

In a tweet on Thursday, U.S. National Security Advisor John Bolton wrote:

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“Today, President Guaido has asked the workers of Citgo to stay in their jobs during the democratic and economic recovery of Venezuela. The fruits of their labor will no longer be used to facilitate graft and corruption by Maduro.”

By Tsvetana Paraskova for Oilprice.com

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