The US Treasury Department has extended a prohibition on a potential takeover by bondholders of Venezuelan state-owned PdV's US refining arm Citgo but has yet to decide whether to allow Chevron and other US companies to continue operating in Venezuela.
The Treasury action prolongs Citgo's insulation from potential takeover by holders of a PdV 2020 bond by extending for another three-month period — until 22 July — a prohibition on their right to seize 50.1pc of Citgo for missed principal and interest payments.
Talks between bondholders and Delaware-based PdV Holding, which controls Citgo, broke down last year. Venezuelan opposition leader Juan Guaido's shadow administration, which has effective control over Citgo but no authority over its Caracas-based parent company PdV or direct access to Citgo revenue, last year defaulted on $842mn in principal and $72mn in interest, giving the bondholders a nominal right to take over Venezuela's most valuable overseas asset.
The Citgo license was due to expire on 22 April — the same deadline that Chevron and four US oil field service providers face to continue operating in Venezuela under the US sanctions regime. Chevron is PdV's most prominent foreign joint venture partner.
The US justified previous waiver extensions on the need to preserve Venezuela's oil industry for a future democratic government. But in a change of tone, the State Department's Venezuela envoy Elliott Abrams said on 8 April that the oil sector is not likely to play as prominent of a role in Venezuela's future.
"The Venezuelan oil is going to be expensive," Abrams said. "There is a move underway away from heavy sulphur oil."
At least some international oil companies will return to Venezuela if a future government creates an investor-friendly environment, he said. "Some of them will not, but it does not matter as much as there are companies that want to invest and produce oil."
The US-backed opposition's economic reconstruction plans for Venezuela are anchored on a full-scale opening of the oil industry.
