U.S. Judge Authorizes Seizure of Venezuela’s CITGO
To the surprise of many in our industry, it was announced today that a US Federal Judge Leonard P. Stark of the U.S. District Court in Wilmington, Delaware, authorized the seizure of Houston-based CITGO Petroleum Corporation.
The order was issued to satisfy a Venezuelan government debt. Adding to this, the U.S. State Department ordered that Asdrúbal Chávez, who headed CITGO, surrender his U.S. visa. It is speculated that this could result in Petroleos de Venezuela, S.A. (PDVSA) losing control of CITGO.
CITGO is one of PDVSA’s largest foreign assets, and with CITGO’s three refineries in the U.S., the Venezuelan government is the largest foreign owner of domestic refinery capacity. CITGO’s refineries account for close to 4% of U.S. fuel capacity, including gasoline, diesel, and jet fuel. In addition, although its lubricant sales volume in the U.S. has waned over the years from close to 150 million gallons at its peak at the turn of the millennium, it remains a major player in the lubricants business.
It will be interesting to see how this plays out. Whereas some in our industry feel it could have a negative impact on CITGO’s lubricant sales by reminding buyers about its connection to Venezuela and bring back memories of President Hugo Chávez’s infamous “the Devil” speech before the United Nations General Assembly in 2006, others speculate that a severance of ties to Venezuela, should it occur, could bolster CITGO’s lubricant sales.