Venezuelan opposition asks Trump to shield Citgo
Venezuela's shadow government is appealing to the White House to issue an executive order aimed at protecting US refiner Citgo from falling into the hands of a leading creditor.
The petition is a last-ditch effort by the putative interim government of Juan Guaido to keep defunct Canadian mining company Crystallex, owned by US hedge fund Tenor Capital Management, from acting on a 29 July US appeals court decision. That ruling ratified the plaintiff's argument that Citgo is an alter ego of the Venezuelan government, opening the door for an auction to fully satisfy its $1.4bn claim.
"Citgo is not lost," said Alejandro Grisanti, a member of the Guaido-appointed "ad hoc" administrative board in exile of Venezuela's national oil company PdV, the parent firm of Citgo. "Monday's announcement is a clear setback, but there are still many legal, political and licensing, etc. resources that can be applied."
"An executive order from President Trump has been requested to protect the country's assets on American soil. ‘For now' this has not been granted because it is understood that the sanctions protect the Venezuelan assets", he said.
The exception are PdV 2020 bondholders who already have a US government license, he said.
In a lengthy statement this afternoon the Guaido-led government said it is pursuing legal appeals, while asserting that Crystallex cannot immediately take action on the US court ruling because the assets are protected by US sanctions.
The outlook for overturning the ruling or taking it to the Supreme Court looks dim. "There is no chance in the world the case will be taken up in court again," a financial sector executive who has followed the case closely told Argus. "The opposition's arguments were bad and they have no Plan B."
There was no immediate US government comment on the possibility of issuing an executive order. A senior US administration official told Argus that the White House would rather stay out of the fray, but it still needs time to decide.
"As with the Chevron decision, there are sharp differences of opinion between those who want to focus on regime change versus those who are concerned with the economic interests of US corporations," the official said.
Citgo is a major corporation and the US arguably does have interests in preserving it, the official said, adding that among the time-buying options is for Citgo to file for bankruptcy.
According to a November 2018 academic paper issued by Lee Buchheit and Mitu Gulati referencing the Iraqi debt crisis and parallels with Venezuela, "the Executive Branch of the U.S. Government has the legal power to facilitate a foreign sovereign debt restructuring in cases where an orderly resolution of the sovereign's debt difficulties is in the national security and foreign policy interests of the United States."
Buchheit was named as the opposition's debt adviser in May 2019.
Crystallex is among a handful of companies that won international arbitration cases stemming from Venezuelan government asset seizures, but have not been able to fully collect the designated compensation from Caracas. Around $800mn is left to pay on the Crystallex claim after Venezuela made partial payments amounting to around $400mn.
A lucrative target
Citgo, the fifth-largest US refiner with 750,000 b/d of capacity, is Venezuela's most valuable overseas asset and a legacy of the Opec country's 1980s overseas drive to ensure commercial outlets for its heavy oil. The company has been the target of Venezuela's myriad creditors for years.
The government of President Nicolas Maduro, whom the US and some 50 other western countries no longer recognize as head of state, regularly tapped Citgo for dividends. In 2016, PdV issued a bond swap secured by 50.1pc of the shares in Citgo's Delaware-based parent company. The holders of the resulting PdV 2020 bonds are lobbying to stop Crystallex from auctioning Citgo and to keep the refiner in Venezuelan state hands in anticipation of a comprehensive debt restructuring involving all creditors.
The other 49.9pc of Citgo's shares are collateral on oil-backed credit issued to Venezuela by Russia's state-controlled Rosneft.
Venezuela's exiled technocrats maneuvered in US courts and the Washington Beltway to retain Citgo since shortly after Guaido declared his interim presidency in January. In mid-February, Guaido named "ad hoc" administrative boards to PdV and its US subsidiaries to protect the asset. The move was overshadowed a week later by a botched US-backed aid campaign and a stillborn 30 April military uprising in support of Guaido.
In May, the US-backed opposition took a gamble by paying $72mn in interest on the PdV 2020 bond, arguing that the Maduro government would have defaulted because of US sanctions. Up to that point, the PdV 2020s stood out as the only Venezuelan bond that was still current. The funds for the opposition payment came from PdV's frozen US accounts released by the US Treasury.
Guaido's advisers are seeking US Treasury sanctions clearance to negotiate a delay in paying $842mn in principal on the PdV 2020 bonds due in October. By then, Crystallex could move to auction Citgo, unless the US government steps in to temporarily halt the sale. In the same month of October, the White House will decide whether Chevron gets another extension on its waiver to operate in Venezuela.
In a sidebar to the crisis, the opposition statement asserted that Jose Ignacio Hernandez, Guaido's ad hoc attorney general, had recused himself from the Crystallex case as he had testified on behalf of the company before he joined the exile administration.
The Citgo case is unfolding just as US election season gets into full swing, but for now the Venezuelan cause has fallen into the margins of US politics. An opposition-led campaign for protected status for Venezuelan migrants passed the US House of Representatives this month but was not taken up by the Senate before its recess period.
Related news posts
Libyan crude production slips below 600,000 b/d
Libyan crude production slips below 600,000 b/d
Dubai, 30 August (Argus) — Libya's crude output has fallen to below 600,000 b/d, less than half what the country was producing just a month ago, according to figures reported by state-owned oil company NOC. Production has plummeted in recent days after Libya's eastern-based administration announced a blockade on oil output and exports in response to moves by its rival, the Tripoli-based Presidential Council, to replace the central bank governor. Libya produced 591,024 bl on 28 August, NOC said, down from 783,422 bl on 27 August and 958,979 bl on 26 August, NOC said. Production is almost certain to have fallen further on 29-30 August. It represents a more than halving of output in the space of just a month. Production stood at 1.28mn bl on 20 July, NOC said, while Argus assessed the July average at 1.2mn b/d. Total losses over 26-28 August amounted to around 1.5mn bl, worth just over $120mn. NOC said. All of Libya's eastern oil terminals — Es Sider, Ras Lanuf, Zueitina, Marsa el Hariga and Marsa el Brega — received instructions to stop operations at 15:00 local time on 29 August, according to port agents in the country. Some tankers have managed to load crude since the blockade was announced at the start of the week. The New Amorgos and Ohio loaded at Zueitina and Es Sider, respectively, and have since sailed from the country. Five more tankers were scheduled to load crude in the country from today, according to Kpler tracking, four of them in the east. The clash between the rival east and west political factions in Libya had been brewing for over week before the blockade announcement. The eastern-based Libyan National Army (LNA) has imposed several politically motivated oil blockades in the past few years. The LNA ordered the shutdown of the El Sharara field earlier this month, resulting in the loss of around 250,000 b/d of output. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia's Qantas records higher fuel costs in 2023-24
Australia's Qantas records higher fuel costs in 2023-24
Singapore, 30 August (Argus) — Australian airline Qantas Airways recorded a higher fuel bill in the 2023-24 fiscal year to 30 June, as more flights, sustainable aviation fuel (SAF) expenses and carbon offset programmes weighed on costs. Qantas saw its fuel costs rise by 17pc from a year earlier to A$5.32bn ($3.62bn) in 2023-24, according to the company's full-year financial results released on 29 August. The airline group's passenger carrying capacity was up by 21pc on the previous year, with growth in domestic and international capaicty. This saw the group's overall fuel consumption grow to 29mn bl (79,000 b/d), or 18pc up on the previous year. Qantas expects fuel costs in the first half of 2024-25 to remain stable from a year earlier at about A$2.7bn, including hedging and gross carbon costs, with the group forecasting to consume 15.6mn bl of fuel, including SAF. Qantas forecasts domestic group capacity to rise to 104pc of pre-Covid 19 pandemic capacity in the first half of 2024-25. Its international capacity guidance, excluding Jetstar Asia, is expected to rise by about 16pc from the previous year to achieve 102pc of pre-Covid levels in the first half. The group's passenger carrying capacity, measured by available seat kilometres (ASKs), was up on a year earlier by 21pc to 141mn ASK by 2023-24, although this was still about 93pc of pre-Covid levels. Qantas has agreements to offtake SAF, renewing its agreement to buy SAF for flights out of London Heathrow and doubling the size of its corporate customer SAF programme in 2023-24. But the group saw its 2023-24 profit fall, with underlying profit before tax down by 16pc on the previous year to A$2.08bn. By Cara Wong Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India lifts curbs on use of sugarcane juice for ethanol
India lifts curbs on use of sugarcane juice for ethanol
Mumbai, 30 August (Argus) — The Indian government is allowing sugar mills and distilleries to use sugarcane juice and sugar syrup to produce ethanol during the November 2024-October 2025 supply year. The government in December last year halted the use of sugarcane juice and sugar syrup for ethanol production in the 2023-24 supply year, as insufficient rainfall in key growing regions led to a surge in domestic sugar prices and a shortage of the sweetener. Sugar mills and distilleries can also produce ethanol from B-heavy and C-heavy molasses. The food ministry's order added that it will, in co-ordination with the oil ministry, periodically review the diversion of sugar to ethanol production in relation to the production of sugar in the country to ensure the availability of sugar for domestic consumption throughout the year. The government also allowed the Food Corporation of India to sell rice to distilleries for ethanol production during August-October but capped the limit at 2.3mn t of rice. India had suspended supplies of excess rice to distilleries for ethanol production in July 2023 because of food availability and concerns about rising prices. Distilleries will be allowed to load rice during August-October subject to allocation of ethanol to the distilleries by oil marketing companies, the government order said. Of the total ethanol used for blending in gasoline in India, around 61pc comes from B-heavy molasses, 20pc from sugar syrup, 11pc from surplus rice, 6pc from damaged food grains and maize and 2pc from C-heavy molasses. India has a set a goal to increase ethanol blending in gasoline to 20pc by 2025, as part of efforts to reduce its dependence on crude imports. Ethanol blending in gasoline was 13.3pc during November 2023-July 2024 and 15.8pc during July 2024, oil ministry data show. Oil marketing companies buy ethanol from ethanol producers like sugar mills and distilleries to blend with gasoline. By Roshni Devi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK eyes new environmental guidance for oil, gas: Update
UK eyes new environmental guidance for oil, gas: Update
Adds comment from Shell London, 29 August (Argus) — The UK government will develop new environmental guidance for oil and gas firms, in the light of a recent Supreme Court decision that ruled consent for an oil development was unlawful, as the scope 3 emissions — those from burning the oil produced — were not considered. The ruling means that "end use emissions from the burning of extracted hydrocarbons need to be assessed", the government said today. The government will consult on the new guidance and aims to conclude the process "by spring 2025", it said today. It will in the meantime halt and defer the assessment of any environmental statements related to oil and gas extraction and storage activities until the new guidance is in place, including statements that are already being assessed. The Supreme Court in June ruled that Surrey County Council's decision to permit an oil development was "unlawful because the end use atmospheric emissions from burning the extracted oil were not assessed as part of the environmental impact assessment". The government also confirmed that it will not challenge judicial reviews brought against the development consent granted to the Jackdaw and Rosebank oil and gas fields in the North Sea. A judicial review in the UK is a challenge to the way in which a decision has been made by a public body, focusing on the procedures followed rather than the conclusion reached. Environmental campaign groups Greenpeace and Uplift launched legal challenges in December seeking a judicial review of the government's decision to permit Rosebank. Norway's state-owned Equinor and London-listed Ithaca hold 80pc and 20pc of Rosebank, respectively. Greenpeace in July 2022 separately filed a legal challenge against the permitting of Shell's Jackdaw field. "This litigation does not mean the licences for Jackdaw and Rosebank have been withdrawn", the government said. The Labour government, voted into office in July , pledged not to issue any new oil, gas or coal licences, but also promised not to revoke existing ones. Equinor is "currently assessing the implications of today's announcement and will maintain close collaboration with all relevant stakeholders to advance the project. Rosebank is a vital project for the UK and is bringing benefits in terms of investment, job creation and energy security", the company told Argus today. Shell is "carefully considering the implications of today's announcement... we believe the Jackdaw field remains an important development for the UK, providing fuel to heat 1.4mn homes and supporting energy security, as other older gas fields reach the end of production", the company told Argus . North Sea oil and gas production "will be a key component of the UK energy landscape for decades to come", the government said today. The UK government introduced a climate compatibility checkpoint in September 2022, designed to ensure that oil and gas licensing fits UK climate goals. The UK has a legally-binding target of net zero emissions by 2050. The checkpoint, though, does not take into account scope 3 emissions. These typically make up between 80pc and 95pc of total oil and gas company emissions. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
![Generic Hero Banner](/_next/image?url=%2F-%2Fmedia%2Fproject%2Fargusmedia%2Fmainsite%2Fimages%2F14-generic-hero-banners%2Fherobanner_1600x530_generic-c.jpg%3Fh%3D530%26iar%3D0%26w%3D1600%26rev%3D8ec86dce0f724687bd325a9a917cffae%26hash%3D9FD39B08C9D84A160C91A3649C40A186&w=3840&q=75)
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more