U.S. Treasury Extends Citgo's Protection Another Three Months

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Researched by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Earlier this week, the U.S. extended a license protecting Citgo (Houston, Texas) from creditors for another three months, as a tug-of-war over the company's control continues in Venezuela. Citgo's parent company is the state-owned Petróleos de Venezuela S.A. (PDVSA).

The U.S. Department of the Treasury extended its license protection over Citgo until April 20, preventing bondholders from seizing the company. Under the license, bondholders and creditors cannot use Citgo as collateral in their court cases as part of overdue payments by PDVSA.

The U.S. initially issued this license after the Trump administration imposed sanctions on Venezuela in 2019, in a show of support for opposition leader Juan Guaido and Venezuela's National Assembly.

Citgo owns more than 4,400 fuel retail outlets across the U.S. Additionally, the company owns three refineries that help to supply those outlets: the 177,000-barrel-per-day (BBL/d) Lemont Refinery in Illinois, the 425,000-BBL/d Lake Charles Refinery in Louisiana, and the 167,000-BBL/d Corpus Christi Refinery in Texas.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Plant Database can read detailed profiles on the Lemont, Lake Charles and Corpus Christi refineries.

But Venezuela's opposition and government continue to battle for control over the U.S. subsidiary. Currently, the opposition holds the company's administration, as the U.S. government does not recognize the presidency of Nicolas Maduro as legitimate. However, the latest talks between the U.S. and Venezuela could change the status quo.

Meanwhile, Venezuela's oil output in December closed at 676,000 BBL/d, about 13,000 BBL/d higher than the previous month, according to OPEC's monthly oil report and its secondary sources. Oil output in the last quarter of the year was slightly higher than in the third quarter, but about 6% lower than the volumes in the second quarter.

Venezuela's government has vowed on several occasions over the last few years to significantly increase the nation's oil production, but efforts have been futile. But in November, the U.S. Department of the Treasury issued a license for Chevron Corporation (NYSE:CVX) (San Ramon, California), the last U.S. major operating in Venezuela, allowing it to return to normal operations in the South American country.

As part of that license, Chevron can import diluents such as naphtha, which is blended with Venezuela's tar-like heavy oil, and export part of its crude production as payments from its operations in the nation. Additionally, Chevron has been allowed to operate the Petropiar upgrader in the Jose terminal, Venezuela's main export hub. (The Petropiar operation is a joint venture between Chevron and PDVSA.)

Venezuela has yet to see any significant increases in oil production. However, the return of Chevron and the government's efforts to open up the sector could boost the industry, even if just slightly. Nevertheless, political impasses, long-term legal frameworks and investment protections in Venezuela could remain significant obstacles to a robust energy industry.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).