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Venezuela: Citgo in the US may be sold to creditors

The legal and political dispute over control of Venezuela’s refining network in the US, Citgo, threatens an unfavorable outcome for Venezuela.

The US Treasury Department has authorized the Venezuelan opposition to negotiate over government debt and assets abroad, saying it will not oppose a possible sale of the state-owned company.

Citgo is the US-based subsidiary of Venezuelan oil company PDVSA and Venezuela’s largest state asset abroad.

, Venezuela: Citgo in the US may be sold to creditors
The Citgo conglomerate has three refineries (Texas, Illinois, and Louisiana), three pipelines, 48 terminals, and 5,600 service stations across the US (Photo internet reproduction)

The decision clears the way for Venezuela’s creditors to take over Citgo as payment for debt without the consent of Nicolás Maduro’s regime.

A court in the US state of Delaware had already approved the sale of the company following a lawsuit by Canadian mining company Crystallex, which sought compensation for the expropriation of a mine it owned in Venezuela during the 2008 government of former President Hugo Chávez.

However, US sanctions on Venezuela’s oil industry prevented foreign companies from negotiating with Citgo, creating a legal obstacle to satisfying the judgment.

In addition, former President Donald Trump’s administration had protected the company from liquidation through a political decision to continue funding the opposition.

In 2019, Washington recognized former deputy Juan Guaidó as Venezuela’s “interim president” and handed Citgo’s management to allies of the opposition, who had access to the company’s profits and dividends.

Last Thursday (4), Venezuelan President Nicolás Maduro condemned the decision of OFAC (United States Department of the Treasury/Office of Foreign Assets Control), calling the measure “theft.”

“The owner of this company is the Venezuelan people, through PDVSA, and what the government of Joe Biden is doing is one of the biggest robberies, one of the biggest plunders ever against a nation in the world,” he said.

In addition, Venezuelan Vice President Delcy Rodríguez stated last Wednesday (3) that the regime will take all necessary measures to prevent the liquidation of the company and that it “will not recognize any kind of negotiation, any kind of payment agreement with any creditor that is not legitimately led by the Venezuelan state.”


Although the Citgo case is not new, it was extremely affected after Guaidó took control.

It eventually became one of the most important examples of the legal distortions brought by recognizing the “transitional government.”

The company was partially acquired by Venezuela in 1986 and taken over in 1990 to receive and process the heavy oil characteristic of Venezuelan production.

The Citgo conglomerate has three refineries (Texas, Illinois, and Louisiana), three pipelines, 48 terminals, and 5,600 service stations across the United States.

“It is a company worth between US$10 billion and US$15 billion, by far the most valuable Venezuelan asset abroad, in addition to having strategic value because its structures are designed to receive Venezuelan oil,” explained economist Francisco Rodríguez.

In an interview, the University of Denver professor said that in a scenario in which sanctions are lifted, Venezuela would suffer great losses if it had to bring its oil back to the US market without Citgo.

“Losing the company would be very costly because if Venezuela tries to place its products in the United States and no longer owns Citgo, it will have to negotiate with whoever owns the company, and it may be that over time those owners will have other priorities than marketing Venezuelan oil.”

Despite its strategic importance, the government of former President Hugo Chávez claimed in 2006 that Citgo was causing losses to the country and even considered selling it.

However, the company was retained until Nicolás Maduro decided in 2016 to use the state-owned company as collateral in international loan transactions.

“These are PDVSA 2020 bonds, which have the year of maturity in their name,” Rodríguez explains.

At that time, Venezuela began to suffer the negative effects of the drop in oil prices and had to turn to the international credit market to refinance other debts related to the oil industry.

“These were bonds to refinance maturing debt,” the economist said.

Between 2017 and 2018, sanctions imposed by former President Donald Trump effectively froze Venezuela’s external debt, making it difficult for the country to meet its obligations.

The biggest stumbling block came in 2019 when the US recognized Guaidó as a legitimate authority and thus responsible for defaulting on bond payments.

The default prompted creditors to join the demands of Crystallex, which had already won a lawsuit in 2016 that forced Venezuela to compensate the Canadian mining company for expropriating a mine.

In addition to the owners of the PDVSA 2020 bonds and Crystallex, another creditor from the energy sector has joined the lawsuit: the US company ConocoPhillips.

The company had filed a lawsuit with the World Bank’s International Centre for Settlement of Investment Disputes seeking US$8.75 billion in damages for expropriating three oil companies in Venezuela in 2007.

The Crystallex precedent allowed other creditors to add their cases, and currently, all have been admitted by the Delaware court presided over by Judge Leonard Stark.

About 11 creditors, including energy companies, banks, and investment funds, are involved in the case and could benefit from the sale of Citgo.


The US action comes a week after the Bogota Conference, an international meeting organized by President Gustavo Petro in the Colombian capital to revive dialogue between the Venezuelan regime and the opposition.

With 20 countries present, the United States sent a delegation and participated for the first time in a multilateral meeting to discuss lifting sanctions.

Although the meeting ended without concrete results on easing the blockade, analysts believe Washington’s recent decision on Citgo could hinder the progress of the talks.

In an interview with “Brasil de Fato,” former Venezuelan Economy Minister Luis Salas Rodríguez said there were political intentions behind the US measure.

“OFAC authorizes a National Assembly, which does not exist in Venezuela, to negotiate a good of the nation, not of the government, not of the ruling party, not of Chavismo, without any authority or legitimacy,” Salas Rodríguez said.

The “National Assembly” mentioned by Salas comprises a group of former opposition deputies who do not recognize the mandate of the current Venezuelan Parliament, which was established after the 2020 general elections.

This group unilaterally renewed its “mandate” after deposing Juan Guaidó as “interim president” last December.

Washington recognized the “2015 National Assembly” as Venezuela’s only legitimate body.

“This group will negotiate with private actors who have harmed the national interest in every way,” Salas said.

For the former minister, “this measure is political, to put pressure on the Venezuelan regime and certainly to give new impetus to some parts of the opposition associated with these irregular actions against Citgo.”

Salas also pointed out that “the Venezuelan government has shown that this is a way to pressure and bombard the Bogotá conference.

In a statement, the Venezuelan Foreign Ministry said that OFAC’s decision “nullifies the progress of the Bogotá Conference” and that the US is deceiving the other countries that participated in the meeting to “contribute solutions to the negotiations that the Bolivarian government is conducting with part of the Venezuelan opposition.”

“The result, a week later, was this license to steal our main oil industry in the country,” the State Department said.

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