Venezuela denounces US-ordered ‘forced sale’ of oil firm Citgo | Oil and Gas News | USAEMALL.com

A Delaware judge has ordered the sale to settle debts, as Venezuela says US military buildup is targeting its oil reserves.

Venezuelan Vice President and Minister of Petroleum Delcy Rodriguez has condemned a US court’s decision to authorise the “fraudulent” and “forced” sale of Venezuelan oil company Citgo in the United States to pay off billions of dollars in debts.

“We energetically reject the decision adopted in the judicial process”, Rodriguez said in a statement read on state television about the sale, which the Venezuelan government has always opposed.

Delaware Judge Leonard Stark last week ordered the sale of Citgo’s parent company to Amber Energy, an affiliate of the hedge fund Elliott Investment Management, for $5.9bn. Elliott Investment Management said in a press release that the court order was “backed by a group of strategic US energy investors”.

Citgo, a Houston-based subsidiary of Venezuela’s PDVSA (Petroleos de Venezuela, SA), a state-owned oil company, has been facing claims that it owes more than $20bn to creditors, reflecting the broader financial woes of the South American country under US sanctions, which have targeted its once profitable oil industry.

The company’s creditors include the Canadian firm Crystallex, which another US court said was owed $1.2bn by the Venezuelan government in 2019 over Caracas’s 2008 seizure and nationalisation of the Las Cristinas mine, which is rich with gold, diamonds, iron and other minerals.

The sale of Citgo comes as Venezuelan President Nicolas Maduro claims that the US’s recent military build-up in the Caribbean Sea surrounding his country is aimed at seizing Venezuela’s vast oil reserves.

While Venezuela holds the world’s largest proven oil reserves, estimated at 303 billion barrels as of 2023, it exported just $4.05bn worth of crude oil in 2023, far below other major oil-producing countries, in part due to US sanctions imposed during US President Donald Trump’s first term.

Last week, Maduro called on fellow members of the Organization of the Petroleum Exporting Countries (OPEC) to help his country counter “growing and illegal threats” from the US and its president.

However, Paolo von Schirach, the president of the Global Policy Institute, said that he doubted that Venezuela’s plea would elicit much support “within OPEC itself”.

The Trump administration has claimed that its military actions in the region are focused on tackling drug trafficking.

Venezuela was historically one of the largest exporters of oil to the United States, but sales declined sharply after Hugo Chavez was elected president in 1998.

Then, facing strict sanctions under the first Trump administration, Venezuela shifted its exports to countries including China, India and Cuba.

A slight easing of the trade tensions under former US President Joe Biden’s administration saw US multinational company Chevron granted a limited oil production licence, before sanctions were again tightened at the beginning of the second Trump administration in March this year.

PDVSA, the state-owned oil company that has dominated Venezuela’s exploitation of its vast oil reserves, has faced other challenges, including ageing infrastructure, underinvestment and mismanagement, as well as the effects of international sanctions.