Venezuela’s CITGO to Brief Bidders as Share Auction Proceeds

Corporations will present binding offers in the coming weeks, including “credit bids” from the likes of ConocoPhillips.
Citgo share auction
Venezuela is set to lose ownership of its prized US-based oil subsidiary. (Mark Leary)

Caracas, April 1, 2024 ( – Venezuela’s US-based oil refiner CITGO will open a data room to corporations as part of a court-ordered sale.

According to Reuters, potential bidders will access financial and operational information about the firm in the coming days as part of the proceedings that are set to permanently deprive the Caribbean nation of its most prized foreign asset.

In October 2022, Delaware District Judge Leonard P. Stark officially began the auction of shares belonging to PDV Holding (PDVH), CITGO’s parent company, in order to satisfy a number of international arbitration awards.

The legal efforts by corporations to collect on debts relied on so-called “alter ego” rulings that determined that Venezuela and state oil company PDVSA were one and the same, and thus the latter was liable for the former’s debts.

Canadian miner Crystallex secured an original favorable alter ego decision in 2019. The judgment was repeatedly upheld by both Stark and the Third Circuit Court of Appeals who pointed to the actions of the US-recognized Juan Guaidó-led “interim government.” The verdicts allowed several other firms to enter the court-mandated sale.

A total of 18 corporations attached claims worth a combined US $21.3 billion to the Delaware court-ordered proceedings. The amount exceeds CITGO’s present valuation of $13 billion.

The information sharing with interested parties opens a second round of bidding where only binding offers will be taken. Investment bank Evercore was hired by the court to oversee the process, which is expected to close in mid-2024.

The first round reportedly saw no bids over $7.3 billion after Stark ruled out establishing a “stalking horse” minimum price. The present CITGO board has reportedly offered a $10 billion payment in the form of shares, future profits and borrowings. However, the present company authorities do not answer to any legitimate Venezuelan authority, having been appointed by Guaidó and kept in place by a defunct, US-backed parliament.

The auction process will pay creditors on a “first come, first serve basis,” based on when they had their writs approved. Crystallex ($1.0 billion), TIdewater ($80 million), ConocoPhillips ($1.4 billion) and O-I Glass ($700 million) stand at the top of the list.

ConocoPhillips is additionally seeking compensation for a separate $8.5 billion award granted by the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). The award has accrued over $1.7 billion in interest but remains under appeal at ICSID.

Nevertheless, ConocoPhillips won a default ruling to enforce the award after lawyers representing the Guaidó parallel administration did not appear in court. In late 2023, Judge Stark dismissed efforts to keep the oil giant from attaching the claim to the ongoing auction.

The Houston-headquartered corporation has reportedly expressed interest in using its combined claims as a bid. Credit bids, as well as offers below the total liability amount, might lead to disputes from claimants who will not get paid.

Besides the international arbitration awards, CITGO is also liable to holders of the defaulted PDVSA 2020 bond with 50.1 percent of the company’s shares pledged as collateral. Successive US Treasury orders have barred bondholders from seizing collateral, with the existing protection expiring in April. They are expected to proceed once the auction share concludes and CITGO changes ownership.

The Nicolás Maduro government has repeatedly denounced the “theft” of Venezuela’s US-based refiner and vowed to take “political, diplomatic and judicial” actions to defend the country’s interests.

CITGO has refineries in Illinois, Louisiana and Texas, as well as a network of more than four thousand gas stations. It used to return as much as $1 billion in yearly dividends to Caracas before Washington’s levying of wide-reaching sanctions and the opposition taking over the enterprise.