Venezuela denounces US-ordered ‘forced sale’ of oil company Citgo | Oil and Gas News

A Delaware judge has ordered a sale to repay debt as Venezuela says a US military buildup is targeting its oil reserves.

Venezuelan Vice President and Petroleum Minister Delcy Rodríguez has condemned a US court’s decision to authorize the “fraudulent” and “forced” sale of Venezuelan oil company Citgo to the United States to pay off billions of dollars of debt.

“We strongly reject the decision adopted in the judicial process”, which the Venezuelan government has always opposed, Rodríguez said in a statement read on state television about the sale.

Delaware Judge Leonard Stark last week ordered the sale of Citgo’s parent company to hedge fund Elliott Investment Management affiliate Amber Energy for $5.9 billion. Elliott Investment Management said in a press release that the court order was “supported by a group of strategic US energy investors”.

Citgo, the Houston-based subsidiary of Venezuelan state-owned oil company PDVSA (Petroleos de Venezuela, SA), is facing claims it owes creditors more than $20 billion, reflecting the South American country’s broader financial problems under US sanctions that have targeted its once-profitable oil industry.

The company’s creditors include Canadian firm Crystallex, which another US court said was owed $1.2 billion in 2019 by the Venezuelan government over the Caracas’ 2008 seizure and nationalization of the Las Cristinas mine, which is rich in gold, diamonds, iron and other minerals.

The Citgo sale comes after Venezuelan President Nicolas Maduro claimed that the recent US military buildup in the Caribbean Sea around his country is aimed at seizing Venezuela’s vast oil reserves.

While Venezuela has the world’s largest proven oil reserves, estimated at 303 billion barrels by 2023, it exported only $4.05 billion worth of crude in 2023, far below other major oil-producing countries, partly due to US sanctions imposed during US President Donald Trump’s first term.

Last week, Maduro called on fellow members of the Organization of the Petroleum Exporting Countries (OPEC) to help his country counter “growing and illegal threats” from the US and its president.

However, Global Policy Institute president Paolo von Schirach said he doubted Venezuela’s petition would gain much support “within OPEC itself.”

The Trump administration has claimed that its military action in the region is focused on combating drug trafficking.

Venezuela was historically one of the largest exporters of oil to the United States, but sales declined sharply after Hugo Chávez was elected president in 1998.

Then, facing tougher sanctions under the first Trump administration, Venezuela shifted its exports to countries including China, India and Cuba.

US multinational Chevron was granted a limited oil production license following a slight easing of trade tensions under the administration of former US President Joe Biden, before sanctions were tightened again at the start of the second Trump administration in March this year.

PDVSA, the state-owned oil company that dominates the exploitation of Venezuela’s vast oil reserves, has faced other challenges, including aging infrastructure, underinvestment and mismanagement, as well as the effects of international sanctions.