Abstract
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Citgo, a subsidiary of Venezuela’s PDVSA, faces an existential crisis in the U.S.
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The company could be auctioned if it fails to negotiate with creditors.
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The situation is entangled in the political struggle between Washington and Dictator Nicolás Maduro.
Citgo’s Existential Crisis: A Negotiation or Auction?
Citgo, the U.S. subsidiary of Venezuela’s state-owned Petróleos de Venezuela (PDVSA), is at a crossroads. The company is under siege by creditors in U.S. courts, and it could face auction if it fails to negotiate with those seeking to collect Venezuelan debts through the sale of the refinery’s shares.
Can Venezuela Save Its Largest Foreign Asset?
The question of whether Venezuela can prevent the auction of its largest foreign asset is a complex one. The situation is further complicated by the political tug-of-war between Washington and Dictator Nicolás Maduro, which includes an embargo on Venezuelan crude oil since 2019.
The Growing List of Creditors
The list of creditors hoping to collect various types of debts has pushed claims against Citgo in the United States to over $20 billion, according to London-based consultancy EMFI Securities. The figure includes litigation for PDVSA bonds issued by Maduro’s administration in 2020, with 50.1% of Citgo’s shares as collateral, and causes for expropriation of oil and mining assets in Venezuela.
The Alternative: Negotiation
The alternative for the ad hoc board that the Venezuelan opposition appointed for PDVSA in 2019, recognized by Washington in its offensive to try to displace Maduro, is to negotiate with creditors. Its president, Horacio Medina, maintains that Citgo can renegotiate about $11 billion of the claimed amounts immediately.
The Uncertain Future
Despite the company’s improved position, the future remains uncertain. Last year, Federal Judge Leonard Stark approved measures to sell the shares of PDV Holding, Citgo’s parent company, as compensation to the Canadian corporation Crystallex for the expropriation of a mine in Venezuela in 2011. U.S. company ConocoPhillips also awaits compensation for expropriations that occurred in 2007.
Conclusion
Citgo, the U.S. subsidiary of Venezuela’s PDVSA, is in a precarious situation. The company could be auctioned off if it fails to negotiate with creditors seeking to collect Venezuelan debts. The situation is a complex one, entangled in the political struggle between Washington and Dictator Nicolás Maduro.