CARACAS, Venezuela -- Venezuela has settled a $1.2 billion claim in a deal that will prevent a creditor from gaining control of CITGO’s U.S.-based refining business, CITGO Petroleum Corp., reported Reuters, citing Canadian court documents.
A U.S. judge in Delaware was scheduled to hear arguments on Dec. 20 for a court-ordered auction of control of CITGO, said the report.
Houston-based CITGO is owned by CITGO Holding Inc., a subsidiary of Venezuela’s Caracas-based state-run oil company Petroleos de Venezuela SA (PDVSA). Through CITGO’s refineries in Corpus Christi, Texas, Lake Charles, La., and Lemont, Ill., the Venezuelan government is the largest foreign owner of U.S. domestic refinery capacity. The refineries account for about 4% of domestic fuel capacity and are major suppliers of gasoline, diesel and jet fuel through a network of pipelines and terminals across 24 states. Independent CITGO-branded retail marketers sell motor fuels through about 6,000 gas stations and convenience stores in 30 states.
The deal with Toronto-based Crystallex International Corp. suspends the defunct mining company’s push for a court-ordered auction for control of CITGO as a way of collecting on an arbitration award against Venezuela that has grown to more than $1.4 billion with interest, said the report.
Venezuela completed an initial payment of $425 million, mostly in the form of liquid securities, on Nov. 23, according to the news agency, citing a filing in the Ontario Court of Justice, where Crystallex sought protection from creditors in 2011. Part of the payment was made in bonds issued by Venezuela and PDVSA, a Venezuelan finance industry source with knowledge of the matter told Reuters. Venezuela agreed to pay the remainder in installments by early 2021. If Venezuela fails to post collateral by Jan. 10 for the remaining payments, Crystallex can restart legal proceedings, the report said.
Venezuela is in the midst of a political and economic crisis and dealing with U.S. sanctions. It has halted payments on tens of billions of dollars of debt. Venezuela also settled with ConocoPhillips and Rusoro Mining Ltd. to stop other debt-collection lawsuits targeting CITGO, reported The Wall Street Journal.