Citgo assets draw more claimants as sale begins

  • Market: Crude oil
  • 24/01/24

US refiner Citgo's parent company has gone on the auction block this week but the US federal court that ordered the sale is dealing with an onrush of claimants seeking to benefit from proceeds.

A total of 26 claimants have so far registered with the court, having filed claims amounting to more than $21bn. The US District Court for the District of Delaware today allowed one more claim, by US investment fund Altana, but judge Leonard Stark who presides over the case suggested that further claims would face a higher hurdle.

Only those that had filed their claims against Venezuela well in advance of the 12 January deadline set by the court would be allowed to join the queue of claimants pursuing a piece of Citgo sale proceeds, Stark said at a court hearing today. The court may allow limited exceptions if claimants prove they were prevented from meeting that deadline, Stark said.

First bids for Citgo parent PdV Holding (PdVH) were due on 22 January, and "the sale is not scheduled to occur until July," Stark said.

Citgo, with 805,000 b/d in capacity at three US refineries, has become a target of takeover by dozens of creditors looking to satisfy claims both against Venezuelan state-owned PdV — Citgo's ultimate owner — and the Venezuelan government. The court process started in 2017 to satisfy a $990mn claim by defunct Canadian mining firm Crystallex, now owned by New York hedge fund Tenor Capital. ConocoPhillips has registered three claims totalling almost $12bn. The next largest claim is by Russian-Canadian gold miner Rusoro, while energy company Koch's minerals arm is chasing a $457mn claim.

The legal wrangling over Citgo is unlikely to conclude even if the Delaware court successfully executes the sale. Separate US court proceedings involve holders of $3.4bn in PdV 2020 bonds guaranteed by 50.1pc in Citgo Holding — a PdVH-owned legal entity that directly owns Citgo. The US government has blocked the bondholders' ability to pursue the claim, most recently issuing a ban that is valid until mid-April.

Separately, there is an inconvenient question of who exactly is the ultimate owner of Citgo. The company since 2019 operated under direction of the board appointed by the Venezuelan opposition and vetted by the US government. The Venezuelan opposition at that time claimed to be its country's legitimate government, a status accepted by the US government until 2022. Parent company PdV has always remained under the control of Venezuelan president Nicolas Maduro's government.

Citgo is an "alter ego" — a legal equivalent — of PdV and the Venezuelan government for the purpose of satisfying outstanding claims in US courts, Stark said today, regardless of whether it is Maduro or the opposition who are in charge.

The auction will determine whether the sum of all claims against Citgo's parent exceeds the company's value. The court has a ranking of claims, placing Crystallex's claim and one of the three ConocoPhillips claims, valued at $1.5bn, at the top of the list.

US investment bank Wells Fargo has pegged the enterprise value of Citgo's assets at $6.5bn-$14bn.

The court-appointed "special master" presiding over the auction has concluded that the sale would generate the highest revenue if the company is sold as a whole. Few peers of Citgo have publicly expressed interest in a wholesale takeover but there may still be interest in specific parts of the seventh-largest US refiner.


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22/04/24

Oman’s PDO to hit 700,000 b/d crude before 2030 target

Oman’s PDO to hit 700,000 b/d crude before 2030 target

Muscat, 22 April (Argus) — Oman's state-controlled PDO has several new greenfield projects that it is looking to bring on stream that should see it reach, and blow past, its target for 700,000 b/d of crude before the end of the decade. Speaking at the Oman Petroleum and Energy show in Muscat today, PDO's managing director Steve Phimister said the company has a portfolio of new "sizeable" projects in the pipeline and expects to reach 700,000 b/d by the "middle of the decade". "But what we would not be going to see in the next couple of years are multibillion dollar projects like Yibal Khuff or Rabab Harweel," he added. PDO's Yibal Khuff — one of Oman's most technically complex upstream projects — came online in 2021 and production was 20,000 b/d in 2022, according to the latest available data for production. Rabab Harweel , Oman's largest enhanced oil recovery (EOR) project, came onstream in 2018 and is producing more than 70,000 b/d. PDO adds around 10,000-15,000 b/d to its production on an average every year, according to Phimister. "Our strategy is to go above 700,000 b/d," he said. "We could, in principle, go quite way above 700,000 b/d of black oil, depending on oil price, shareholder's desire on where they want to invest". But he said PDO wants to grow in "a sustainable way" while "balancing out emission targets." The company in 2021 pledged to reach net zero carbon emissions from its operations by 2050 . The company is likely to hold onto its previous capital expenditure plans, although this is subject to final approval, Phimister said. "We have invested roughly the same amount of capital in the last few years and continue to do so," he said, adding that PDO now has a dual challenge of growing old business while reducing carbon emissions. PDO's planned capital expenditure for last year was $5bn and operating expenditure was at $2bn, in line with 2022 levels. The Omani state owns 60pc of PDO, Shell holds 34pc and TotalEnergies has 4pc. By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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ExxonMobil turns up heat on climate activists


22/04/24
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22/04/24

ExxonMobil turns up heat on climate activists

New York, 22 April (Argus) — In the run-up to the annual proxy voting season, ExxonMobil is tightening the screws on climate activists it accuses of wasting the company's resources by repeatedly submitting the same shareholder proposals that have been resoundingly defeated in the past. In its 2024 proxy statement released this month, the top US oil major lays out the case against what it describes as "serial proponents" of ballot measures that abuse the shareholder proposal process by pushing their own narrow agenda at the expense of long-term shareholders. The campaign builds on a lawsuit filed against two investors at the start of the year that were leading the clamour for ExxonMobil to accelerate its climate goals and target emissions from customers. Dutch activist group Follow This and sustainable investment firm Arjuna Capital withdrew their motion in light of the lawsuit, but the oil major has continued with its legal action, arguing that "important issues remain for the court to decide". ExxonMobil is also calling for a stricter interpretation of rules governing the proxy process on the part of the US Securities and Exchange Commission (SEC). The lawsuit follows a growing backlash against environmental, social and governance investing by Republican-led states that has taken aim at large asset managers including BlackRock. The pushback has seen the SEC water down new climate risk disclosure rules following an intense lobbying effort by big business. And US bank JP Morgan chief executive Jamie Dimon recently slammed the White House's LNG export pause as "not only wrong but also enormously naive". The high watermark of the shareholder climate push came in 2021 when a tiny hedge fund overthrew a quarter of ExxonMobil's board with help from institutional investors concerned with the company's lagging financial performance. The difference between then and now is that oil industry profits have bounced back in the intervening years as the debate has shifted in favour of energy security following the war in Ukraine, sending ExxonMobil's share price to new highs. As a result, support for climate motions at oil companies has declined. ExxonMobil has four shareholder measures on the ballot for this year, down from 13 a year ago. Over at Chevron, the second-biggest US oil major, investors will vote on four shareholder proposals, down from eight in 2023. ExxonMobil is encouraging shareholders to vote against the proposals calling on it to cut executive pay incentives for emissions reductions, as well as carry out reports into pay in relation to gender and racial bias, the impact on workers and communities of the energy transition, and plastics. Ballot measures at Chevron include calls to implement reports on tax transparency and human rights practices. Early warning system? Only 3.55pc of the 140 resolutions filed at ExxonMobil annual meetings between 2014 and 2023 passed, the company says. The cost of considering each proposal is as much as $150,000. But proposals that initially attract only a small amount of shareholder support can sometimes act as an early warning system that spurs changes in company strategy further out, climate activists argue. ExxonMobil's lawsuit is an "aggressive effort to chill consideration among its shareholders about how the company is adapting its business model in light of the need for a fair and fast transition away from fossil fuels", advocacy group the Union of Concerned Scientists campaign director Kathy Mulvey says. Shareholder advocate As You Sow, criticised in ExxonMobil's proxy statement, accuses the major of attacking shareholder democracy. The board "should consider proposals on their merits, rather than assaulting the long-standing rights of company owners or their representatives", the group's president, Danielle Fugere, says. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US reimposes Venezuela oil sanctions


19/04/24
News
19/04/24

US reimposes Venezuela oil sanctions

The most immediate impact of the decision is likely to be a re-routing of Venezuelan oil flows, write Haik Gugarats and Kuganiga Kuganeswaran Washington, 19 April (Argus) — The US administration on 17 April reimposed sanctions targeting Venezuela's oil exports and energy-sector investments, and set a deadline of 31 May for most foreign companies to wind down business with state-owned oil firm PdV. The US decision rescinds a sanctions waiver issued in October that allowed Venezuela to sell oil freely to any buyer and invite foreign investment in the country's energy sector. The waiver, which was due to expire on 18 April, was tied to Caracas' agreement to hold a competitive presidential election and allow opposition politicians to contest it. Venezuelan president Nicolas Maduro's government reneged on this deal by refusing to register leading opposition candidate Maria Corina Machado or an alternative candidate designated by her, a senior US official says. The US considered the potential effects on global energy markets and other factors in its decision, but "fundamentally, the decision was based on the actions and non-actions of the Venezuelan authorities", the official says. Separate sanctions waivers granted to Chevron and oil field service companies Halliburton, SLB, Baker Hughes and Weatherford will remain in place. Chevron will be allowed to continue lifting oil from its joint venture with PdV, solely for imports to the US. US-bound Venezuelan crude volumes averaged 133,000 b/d last year, up from nothing in 2022. Chevron says its Venezuela output was 150,000 b/d at the end of 2023. Argus estimated Venezuela's crude output at 850,000 b/d in March, up by 150,000 b/d on the year. PdV says it will seek to change the terms of its nine active joint ventures , starting with Spain's Repsol, in a bid to boost production. Sanctions impact The reimposition of sanctions will primarily affect Venezuelan exports to India and China. India has emerged as a major new destination for Venezuelan crude since the US lifted sanctions in October, having imported 152,000 b/d in March. Two more Venezuelan cargoes are heading to India and expected to arrive before the 31 May deadline. The VLCC Caspar left the Jose terminal on 14 March and is expected to arrive at an as-yet-unknown Indian west coast port on 26 April. The Suezmax Tinos left Venezuela on 18 March and is due at Sikka on 30 April. Chinese imports of Venezuelan Merey, often labelled as diluted bitumen, have been lower since October. Independent refiners in Shandong, which benefited from wide discounts on the sanctioned Venezuelan crude, cut back imports to just a fraction of pre-relief levels as prices rose, while state-controlled PetroChina was able to resume imports under the waiver. The Merey discount to Brent had already widened in anticipation of the reimposition of sanctions. Separate US authorisations previously issued to Repsol and Italy's Eni to allow oil-for-debt deals with PdV and enable a Shell project to import natural gas from Venezuela's Dragon field to Trinidad and Tobago are expected to remain in place. Repsol imported 23,000 b/d of Venezuelan crude to Spain last year and 29,000 b/d so far this year, according to data from oil analytics firm Vortexa. US sanctions enforcers as a rule do not disclose the terms of private sanctions licences, and the European companies were not immediately available to comment. The US would still consider future requests for sanctions waivers for specific energy projects, another senior official says. The US administration says it will consider lifting the sanctions again if Maduro's government allows opposition candidates to participate in the July presidential election. The US' action on 17 April "should not be viewed as a final decision that we no longer believe Venezuela can hold competitive and inclusive elections", a third senior official says. Chinese imports of Venezuelan crude Venezuelan crude exports Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US restricts future oil leasing in NPR-A


19/04/24
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19/04/24

US restricts future oil leasing in NPR-A

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Limited strike on Iran opens door to de-escalation


19/04/24
News
19/04/24

Limited strike on Iran opens door to de-escalation

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