Latin America Advisor
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How Likely Is Venezuela to Lose Control of Citgo?
The parent of Venezuela’s U.S.-based refiner, Citgo, could be sold off in order to pay off creditors of the South American country. // File Photo: Mike Mozart via Creative Commons.
A U.S. judge on Jan. 8 granted a large number of creditors the right to participate in a planned auction of shares in the parent company of Venezuela-owned refiner Citgo Petroleum. A lawsuit by Canadian mining company Crystallex tied Citgo to Venezuela’s debts and opened the state-owned refiner to approximately $24 billion in claims. How likely is the auction to proceed as scheduled this year, and what would be its effects? How much of a chance do creditors and Citgo’s parent have at reaching deals in settlement talks? How likely is Venezuela to lose control of Citgo, and who could be poised to take control of it?
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Michael C. Lynch, president of Strategic Energy & Economic Research and distinguished fellow at the Energy Policy Research Institute: “Because a U.S. judge has allowed more creditors of Venezuela to participate in a planned auction of shares in PDV Holding, which controls Venezuelan-owned Citgo Petroleum, a negotiated settlement is less likely and the auction, scheduled for Monday, will proceed. Crystallex and ConocoPhillips have sued for an amount nearly equal to the value of the company and with the addition of further creditors, the likelihood that PDV Holding will be left with a significant ownership share is diminished. ConocoPhillips has the largest claim against PDV Holding, which would, in theory, give it the best chance of controlling Citgo. However, ConocoPhillips might not bid on the shares, preferring the cash from the sale after…”
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A sister publication of the Inter-American Dialogue’s daily Latin America Advisor, the weekly Energy Advisor captures fresh analysis from business leaders and government officials on the most important developments in oil and gas, biofuels, the power sector, renewables, new technologies, and the policy debates shaping the future of energy in the Western Hemisphere and beyond. To subscribe or for more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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