US court clears sale of Citgo shares

  • : Crude oil, Oil products
  • 20/05/25

A US federal court has given a go-ahead to the potential sale of shares in US refiner Citgo to satisfy Venezuela's debts, stressing that upholding debtholders' rights outweigh any political considerations.

The decision is another setback for Venezuela's US-supported political opposition, which has nominal control over Citgo since last year, even though the refiner's parent, state-owned PdV, remains in the control of the Venezuelan government of President Nicolas Maduro in Caracas that faces US sanctions.

The legal process for selling Venezuela's most valuable foreign asset can proceed, judge Leonard Stark of the US District Court for the District of Delaware ruled on 22 May, after the US Supreme Court declined to consider an appeal of the lower court ruling. The US district court will hear arguments on procedure for the sale on 17 July.

The primary claimant for shares in Citgo's US holding company PdVH is former Canadian mining firm Crystallex, which is now controlled by New York hedge fund Tenor Capital. The Delaware district court is considering separate claims from Crystallex and US independent producer ConocoPhillips, both of which have won international arbitration awards related to the Venezuelan government's takeover of their assets.

Crystallex, which is seeking to collect a $1.2bn arbitration award for expropriated gold mining interests, convinced the Delaware court in 2018 that Citgo operated as an alter ego of the Venezuelan government and could be sold to satisfy the country's more than $150bn in debts. Among other creditors laying claim to Citgo shares are holders of a PdV 2020 bond, which fell into default in October 2019.

The spotlight now shifts to the US government, which issued an executive order in August 2019 that bars sales of any Venezuelan assets without Treasury Department clearance.

Crystallex already petitioned Treasury's sanctions enforcement arm, the Office of Foreign Assets Control (Ofac), for a license to proceed with the sale.

Treasury clarified in late November that US sanctions on Venezuela and the Maduro government prohibited any enforcement of judicial or arbitration decisions without a lifting of sanctions or an executive order. A separate, specific license also prevents bondholders from taking over the refiner. The US last month extended that license into July.

Stark in his closely watched ruling noted that "no executive branch order or regulation prohibits this court from moving forward in determining how the attached shares will be sold." Stark invited US government representatives to make counter-arguments at the 17 July hearing.

Debtholders' rights hold primacy over other considerations, Stark said, citing a US Third Circuit Court of Appeals decision. "Any outcome where Crystallex is not paid means that Venezuela has avoided its obligations."

Venezuela's Western-recognized interim government described the Crystallex case as a "monstrosity" of Maduro's making but asserted that Citgo remains "protected" from seizure thanks to the US executive order.


Venezuela's mainstream opposition has made the defense of Citgo a policy cornerstone since National Assembly speaker Juan Guaido declared an interim presidency in January 2019. Guaido and his exiled advisers argue that Citgo is vital to Venezuela's reconstruction after Maduro is forced out.

The keep-Citgo strategy has become more difficult to sustain the longer that Maduro remains in power. The Guaido authority has no access to Citgo's revenue and cannot tap the refiner to supply gasoline to Venezuela because of the US sanctions.

Over the weekend the first Iranian cargo of gasoline arrived in Venezuela, where fuel scarcity has impeded distribution of food and medical supplies.

Guaido legal adviser Yon Goicoechea told reporters on 22 May that the interim authority "can't take one dollar from Citgo" because "even the earnings of Citgo are frozen and protected by Ofac."

"On the one hand this is bad because the interim government can't use it for social programs or relief, but it is good because… thanks to Ofac's protection the creditors can't get that money."

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more