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Citgo

Trump Administration Extends Protection to Citgo until July 2021

The Government of President Donald Trump has issued successive extensions since October last year to protect Citgo

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The U.S. Government extended this Wednesday until July 2021 the protection to the company Citgo, owned by Petróleos de Venezuela (PDVSA), in view of the possibility of a seizure by the creditors of the state oil company.

In a notice, the Department of the Treasury informed that it had decided to extend until July 21, 2021 the license that prohibits the holders of the PDVSA 2020 bonds to execute the guarantee granted by majority shareholder, protecting Citgo.

The protection afforded Citgo, a company under the control of the interim government of Juan Guaidó, has been extended several times, and was scheduled to expire on January 19th.

Specifically, the Treasury’s license will prohibit transactions with PDVSA 2020 bond, which is in default and has as collateral 51.1% of Citgo’s shares, until July 21, 2021, according to the Treasury’s Office of Foreign Assets Control (OFAC).

In October of last year, the interest payment of the 2020 bond of Petróleos de Venezuela (PDVSA) for $913 million was due.

If the Venezuelan government did not comply with the payment, the holders had the right to assume 51% of the Citgo shares, which are the guarantee of the issue.

The control of Citgo is in the middle of the struggle between the ruling party and the opposition: while U.S. authorities recognize the ad hoc board of directors appointed by the National Assembly and Juan Guaidó, the tyranny of Nicolás Maduro accuses the interim government of appropriating a state asset.

Despite the restrictions represented by U.S. sanctions against Venezuela, PDVSA’s 2020 bond holders, including the Russian state-owned company Rosneft, will be able to execute the guarantee thanks to this license granted by the Treasury Department.

To avoid this, the government of President Donald Trump has issued successive extensions since October of last year.

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

In January 2019, days after Guaidó achieved recognition from Washington and 60 countries, the U.S. government imposed sanctions on PDVSA that included blocking Citgo funds with the aim of eventually transferring them to the interim government.

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