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Delaware Judge Authorizes Sale of Venezuela’s Citgo

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A Delaware judge authorized on Thursday the sale of the shares of Citgo, the main subsidiary of the state-owned oil company Petróleos de Venezuela (PDVSA) on U.S. soil, in compensation to Crystallex for the nationalization, more than a decade ago, of a gold deposit operated by the Canadian mining company in that country.

In addition, Federal District Judge Leonard Stark dismissed motions filed by both Citgo Petroleum and its parent company, PDV Holding (PDVH), and by Venezuela to stop the embargo.

Citgo, based in Houston, Texas, has three refineries in the United States that together process some 750,000 barrels of Venezuelan oil per day, as well as a network of some 10,000 gas stations throughout the country.

In January 2019, days after Juan Guaidó was proclaimed president in charge of Venezuela and received recognition from Washington, the U.S. government imposed sanctions on PDVSA that included blocking Citgo funds with the objective of transferring them to the interim president’s team.

The control of Citgo is a major point of conflict between the Maduro regime and the opposition: while U.S. authorities recognize the ad hoc board of directors appointed by the National Assembly and Guaidó, the tyrant Nicolás Maduro accuses the opposition of appropriating a state asset.

“Crediting Venezuela’s position could nullify this whole litigation,” the judged stated while pointing out that Crystallex “has prevailed in all the courts that have considered any aspect of this case.”

Stark determined that a person will be appointed to supervise the sale procedure, over which neither Venezuela nor PDVSA will have control.

However, Crystallex must obtain a license from the Office of Foreign Assets Control (OFAC) of the Department of the Treasury in order to carry out the operation, due to the sanctions imposed by Washington on the Caribbean country.

In August 2018, the same judge had authorized the seizure of Citgo in favor of Crystallex.

In a communiqué issued in Caracas, Guaidó pointed out that although the ruling “favors the petition of Crystallex”, it reaffirms at the same time that “such sale may not be carried out while the protection obtained by the Legitimate Government through the US Department of the Treasury exists.”

“It is important to keep in mind that the oil subsidiary and other assets of the nation continue to be at risk due to the irresponsible actions of (former Venezuelan President) Hugo Chávez (who died in 2013) and Nicolás Maduro, who -together with their accomplices- compromised the assets of the nation in an unscrupulous manner, without caring about the well-being of Venezuelans and the future of the country,” the statement adds.

The Canadian mining company will pay $1.3 billion dollars for the nationalization in 2008 of the gold deposit Las Cristinas, located in the south of Venezuela, which contains one of the largest gold deposits in the world, so the embargo of PDVH’s shares will serve to satisfy part of the debt.

One year after Venezuela cancelled Crystallex’s participation in the mining project, it announced that it had agreed with the Chinese state investment corporation Citic Group to develop the gold mine, from which it is estimated that some 13 million ounces of this metal can be extracted.

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