The Biden administration has again extended temporary protections shielding Citgo from Venezuela's creditors, even as an auction that could determine the future of the company's parent company is set to begin.
The Treasury Department on Tuesday extended until April 16 the protections suspending a loophole in U.S. sanctions on Venezuela that could have led to that country's national oil company losing control of Citgo, its most valuable foreign asset.
Those protections were put in place by the Trump administration in 2019 and have been regularly extended as legal efforts by Venezuela's creditors to take control of Citgo continue to advance in U.S. courts.
One of those efforts is expected to advance on Jan. 22 when a federal court in Delaware is set to receive the first round of bids for shares in Citgo parent company, PDV Holding. The auction is expected to be completed in July.
The planned auction is the result of legal action brought by Venezuela creditors, who argued that Venezuela's national oil company PDVSA, is so controlled by President Nicolas Maduro that its assets--including Citgo's parent--can be seized to satisfy debts and arbitration awards the country has refused to pay.
Another group of creditors is pursuing legal action over Venezuela's 2019 default on a bond that used shares of PDV Holding as collateral for a bond issued by the country.
Venezuela has been under U.S. sanctions following a disputed presidential election in 2018. The U.S. has supported the Venezuelan opposition while attempting to force Maduro to agree to free and fair elections.
In May, the Treasury Department modified sanctions on Venezuela to allow creditors to negotiate settlement options with the Venezuelan opposition, which currently controls the Citgo board. Attorneys for the opposition have indicated they were willing to seek a settlement.
Citgo operates three refineries in Texas, Louisiana and Illinois with a combined capacity of nearly 750,000 b/d, as well as product terminals and pipelines.
Complicating efforts to target PDV Holding to pay Venezuela's debts are questions about whether the value of Citgo and its assets, estimated to be more than $10 billion, are enough to satisfy the multiple creditors.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
--Reporting by Steve Cronin, scronin@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com
(END) Dow Jones Newswires
01-16-24 1359ET
