Page 11 - NorthAmOil Week 29 2021

NorthAmOil POLICY NorthAmOil

Citgo owns three
US refineries with a
combined throughput
capacity of 760,000
bpd.

OFAC extends licence barring

seizure of Citgo shares

US-VENEZUELA THE Office of Foreign Assets Control (OFAC), “have a favourable licensing policy toward such
a division of the US Treasury Department, has an agreement.”
extended the term of a licence that bars the Owners of the PdVSA securities have filed
seizure of shares in Citgo, a US-based affiliate several suits in the US court system with the aim
of Venezuela’s national oil company (NOC) of gaining access to Citgo shares as compensa-
PdVSA, by holders of a PdVSA bond that tion for the default. According to Argus Media, OFAC
matured last year. the “most advanced” of these is a case in the US
The US government has been protecting District Court for the District of Delaware that acknowledged
Citgo, the owner of three US refineries with a involved the US major ConocoPhillips, the New
combined throughput capacity of 760,000 bar- York-based hedge fund Tenor Capital Manage- bondholders’
rels per day (bpd), in this manner since 2019. At ment and other creditors.
that time, OFAC began issuing licences that sus- The court has already appointed a “special concerns about
pended previous directives permitting PdVSA master” to oversee the process of selling Citgo securing payment
bondholders to enforce their claims by taking to compensate debtholders. However, it has
the Citgo shares that served as collateral for the not proceeded with the sale and has deferred to for the securities
securities issue. OFAC, saying it needs Washington’s permission
Since then, the agency has repeatedly issued to go ahead. issue, which is
new licences to extend this protection. However, Questions about Citgo’s fate have posed
the latest version has a term of only four months. a dilemma for the US government. On the now in default.
(By contrast, OFAC issued a six-month licence in one hand, officials in Washington are sympa-
January of this year.) thetic to the claims of bondholders, who have
In a statement, OFAC acknowledged bond- few avenues of securing payment in light of
holders’ concerns about securing payment for the US sanctions regime that restricts trade
the securities issue, which is now in default. But with Venezuela.; on the other, US authori-
it also urged the investors to pursue an agree- ties are also sympathetic to the Venezuelan
ment on “proposals to restructure or refinance political opposition, which has managed to
payments.” Additionally, it suggested that they wrest control of Citgo away from its parent
“apply for a specific licence”, saying that it would company, PdVSA.™

Week 29 22•July•2021 www. NEWSBASE .com P11