Houston-based Citgo Petroleum is the crown jewel of Venezuela’s international oil assets and it’s in the process of being sold to a refining startup backed by activist investor Paul Singer’s Elliott Investment Management, following a decade-long legal battle.
At the end of November, Elliott-backed Amber Energy won an oft-delayed and hotly contested court-ordered auction for Citgo at a discounted price of $5.9 billion. The company also has to pay more than $2 billion for holders of defaulted Venezuelan bonds. Legal appeals from Venezuela and other bidders remain pending, but the deal is still expected to close by the end of this year, according to energy analysts.
The auction victory for Elliott and Amber came just prior to the Trump administration deposing Venezuelan leader Nicolás Maduro. That move potentially positions Citgo and other U.S. refiners to receive more barrels of the heavy-grade Venezuelan crude oil desired by many Gulf Coast refineries.
Citgo has three U.S. refineries, plus pipeline and terminal assets. Its network refines 800,000 barrels a day at sites in Louisiana, Texas, and Illinois. It has branding and fuel marketing deals with 4,000 independently owned retail outlets throughout the East Coast, Midwest, and South.
Despite Citgo’s 115-year history, the company has been quietly and entirely owned by Venezuela and its state-owned oil company PDVSA since 1990. The company became a target in the legal fight to pay off creditors who lost oil assets, mining rights, and more when they were expropriated under Venezuela’s former socialist ruler, Hugo Chavez, almost 20 years ago.
Elliott and Amber CEO Gregory Goff declined comment for this story.
The other primary beneficiary in the Citgo sale is oil giant ConocoPhillips, which holds more than half of the creditors’ roughly $20 billion in claims. The Chavez regime seized Conoco’s oil assets in 2007.
President Trump is pushing Conoco, Exxon Mobil, and others to return to Venezuela to rebuild the infrastructure and pump more oil, although there’s hesitancy in the industry because of the high costs, political uncertainty, and weak oil prices. Trump is schedule to meet with top oil executives today.
“ConocoPhillips is monitoring developments in Venezuela and their potential implications for global energy supply and stability. It would be premature to speculate on any future business activities or investments,” ConocoPhillips spokesman Dennis Nuss said in a statement.
“We will continue with our collection efforts, which are made in accordance with all applicable laws and regulations,” he added.
A long legal fight and a political minefield
The legal fight between Venezuela and its creditors had brewed for years until 2018 when a small, defunct Canadian mining company, Crystallex, won a federal court ruling saying it could pursue Citgo’s assets to collect more than $1 billion it allegedly lost when Venezuela expropriated foreign assets in 2011. Citgo formally cut operational ties with Venezuela in 2019. Crystallex and Conoco both support the ruling in favor of Elliott’s Amber.
Most Big Oil and major refining players stayed out of the Citgo bidding because of all the legal and geopolitical complications, energy analysts said.
Domestically, U.S. Rep. Thomas Massie, R-Kentucky, a frequent GOP critic of Trump, was quick to target the military actions in Venezuela and used the opportunity to slam Elliott. “Paul Singer, globalist Republican mega-donor who’s already spent [$1 million] to defeat me in the next election, stands to make billions of dollars on his distressed Citgo investment, now that this administration has taken over Venezuela,” Massie posted on social media.
Venezuela and its state oil company, PDVSA, still lay claim to Citgo. They regard the auction as a sham legal process in an enemy nation’s courtroom in Delaware.
It’s unclear if Maduro’s ouster will impact Venezuela’s and PDVSA’s longshot appeals to the federal Third Circuit Court of Appeals.
The sale also must be approved by the U.S. Treasury Department’s Office of Foreign Assets Control. The White House did not reply to requests for comment for this story.
Also appealing is Amber’s top bidding opponent, Gold Reserve. That company made a larger but potentially riskier offer for Citgo that wasn’t deemed as financially certain by the court. Gold Reserve, a smaller creditor impacted by expropriation, has bemoaned the apprehension of its lawyer in Venezuela, José Ignacio Moreno Suárez, who has been detained for more than two years and “subject to intense torture and deprivation.” He has remained captive.
“We applaud the actions by the Trump Administration to bring Maduro to justice, and we look forward to doing our part to assist with a return to peace and prosperity in Venezuela and the expeditious release of … Suarez,” Gold Reserve Vice Chairman Paul Rivett said in a statement.
Chevron is ready to roll
A group of imprisoned U.S. Citgo executives were released in 2022 after five years in prison. The Houston-based executives—five U.S. citizens and one permanent resident dubbed the “Citgo Six”—were arrested in Venezuela for alleged embezzlement and accused of betraying the government. They were eventually released in a prisoner exchange.
While Citgo and other Gulf Coast refiners—Phillips 66, Valero Energy, PBF Energy—could stand to benefit from a larger influx of Venezuelan oil, arguably the biggest winner would be Chevron, the only American company to remain in Venezuela long term, according to Ajay Parmar, director of oil markets analytics for ICIS.
Currently operating under a special license, Chevron could potentially increase its Venezuelan operations, pumping out more oil and sending the barrels to its U.S. refineries, capturing the full value chain.
“Chevron has wanted to produce more [Venezuelan] oil for a long time. They’re the big winner here,” Parmar said. “It is still great; it is still good for [Citgo and other] U.S. refiners.”
