US supports sale of CITGO by next summer

Dive Brief:

CITGO Petroleum Corp. may be sold soon after the Biden administration said it would no longer protect the Venezuelan state-owned oil giant from seizure and backed a forced sale of the company to satisfy Venezuela’s creditors, according to filings in the U.S. District Court of Delaware.
The official process will begin Sept. 5, with a final sale scheduled to commence by June 1, 2024, according to the filings. The U.S. government plans to approve the sale of Venezuela’s stake in CITGO via a court-supervised auction, the documents note.
A sale of CITGO — which garnered an earnings before interest, taxes, amortization and depreciation of $4.4 billion in 2022 and has over 3,000 employees — promises to generate interest from other major oil companies as the M&A landscape remains hot.

Dive Insight:

The U.S. granted control of CITGO to Venezuelan opposition leaders in 2019 during a pressure campaign against President Nicolás Maduro. At this time, the U.S. also imposed sanctions that “prohibited bondholders and other creditors from foreclosing on the company,” according to the Wall Street Journal, and CITGO’s leadership considered filing for bankruptcy as a way to protect its assets.

According to the filings, in May 2021, the courts presented a plan to the U.S. government to sell CITGO as a means to satisfy billions of dollars in unpaid claims to gold mining venture Crystallex International and other creditors. There were no issues on the proposal, according to the filings.

“At no point did the U.S. government express any opinion about or objection to the proposed process that my advisors and I presented… the U.S. government representatives indicated that they had no further questions and did not require any additional information at that time,” Robert B. Pincus, special master for the U.S. District Court for the District of Delaware, wrote in the filings.

Court documents also note that a change in CITGO’s ownership will require a previously attained license from the U.S. Department of Treasury’s Office of Foreign Assets Control.

CITGO did not respond by press time to an inquiry for more details on its potential sale.

Headquartered in Houston, CITGO operates three refineries in Lake Charles, Louisiana; Lemont, Illinois; and Corpus Christi, Texas, and wholly and/or jointly owns 38 active terminals, six pipelines and three lubricants blending and packaging plants. The company is the fifth-largest independent refiner in the U.S., according to its website.