US Extends Protections for CITGO to March 2025

The U.S. Treasury Department on Thursday extended a license protecting Venezuela-owned Citgo Petroleum from bondholders to March 2025, a key decision amid a seven-year-long legal case in which the refiner's parent might be auctioned to pay creditors.

Citgo's parent, PDV Holding, was found liable by the court for Venezuela's debts from asset expropriations and debt defaults. The case has opened a route for creditors to fight for a piece of Venezuela's crown jewel - Citgo's 807,000-barrel-per-day refining network in the United States.

The Delaware court case has gained complexity as holders of Venezuelan bonds and notes have introduced lawsuits before different U.S. courts trying to "jump the line" of creditors that would cash proceeds from the auction. The ranking or line of creditors has been set by the judge in charge of the case.

The U.S. Treasury's Office of Foreign Assets Control is expected to approve the auction's winner, which would ultimately operate Citgo's facilities, as part of the case. A conditional $7.3 billion offer made by an affiliate of firm Elliott Investment Management is pending court approval.

The Treasury Department also extended to May 2025 a separate license for U.S. oil service companies Halliburton HAL.N, SLB SLB.N, Baker Hughes BKR.O and Weatherford International WEATH.UL to maintain assets in Venezuela amid Washington's sanction regime on the South American country.

The authorization allows the firms to conduct only transactions "that are ordinarily incident and necessary to the limited maintenance of essential operations, contracts or other agreements" in Venezuela. The license does not authorize them to drill wells, process, purchase, sell or ship Venezuela-origin oil. The companies also cannot hire additional staff or services, except as required for safety, or engage in any financing deal with Venezuela's U.S.-sanctioned oil firm PDVSA.