Washington — Venezuela's state-owned PDVSA is arguing in US court that the latest sanctions imposed by the Trump administration should block any attempts by Venezuela's creditors to use the US justice system to auction off its Citgo assets.
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PDVSA argued the US sanctions "preclude any use of the shares -- commercial or otherwise," and that courts have held that a "foreign state's assets that are frozen at the time of the attachment order are not being used for a commercial activity and are therefore immune from attachment," according to a court document filed Wednesday in the US Court of Appeals for the Third Circuit in Philadelphia.
The company made the argument in an appeal to a US district judge's ruling in August that Canadian miner Crystallex could auction off PDV Holding's shares in its US refining unit Citgo to collect on a $1.2 billion judgment related to Venezuela nationalizing its gold mine.
The case was seen at the time as a first step in PDVSA possibly losing control of Citgo, its most valued asset.
The US has effectively banned both Venezuelan crude exports to the US and US diluent exports to Venezuela through sanctions announced January 28 against PDVSA.
S&P Global Platts estimates Venezuela produced 1.16 million b/d of oil in January.
The US Energy Information Administration estimated Venezuela's December output at 1.25 million b/d, down 390,000 b/d from December 2017 and down more than 1 million b/d from the 2011-2015 average output of 2.4 million b/d.
EIA will project the country's January output Tuesday in the Short-Term Energy Outlook.
Before the sanctions, PDVSA depended on Citgo's three refineries for supply of refined products and diluent and as an export destination for its crude. Citgo owns a 418,000 b/d refinery in Lake Charles, Louisiana; a 157,000 b/d refinery in Corpus Christi, Texas; and a 179,265 b/d refinery in Lemont, Illinois.
Venezuela had reached a settlement with Crystallex in November by agreeing to payments through 2021 to safeguard its shares in PDV Holding, Citgo's parent company. But the deal fell apart weeks later, and Crystallex is again seeking a court order to enforce its judgment.
ConocoPhillips holds a similar $2 billion arbitration claim that led it to seize Venezuelan storage and refining assets in Caribbean export terminals last year before reaching a settlement with PDVSA for regular payments.
Russia's state-owned Rosneft has its own claims to Citgo after Venezuela used a 49.9% stake in the US refiner as collateral in exchange for a Russian loan in 2016. But even before the latest sanctions, many observers expected the Committee on Foreign Investment in the US to block any attempt to make that transfer on US national security grounds. -- Meghan Gordon, firstname.lastname@example.org
-- Edited by Annie Siebert, email@example.com