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US extends sanctions deadline for Citgo dealings with PDVSA

Washington — The US Department of the Treasury on Thursday gave Citgo at least 18 months to wind down contracts and transactions with parent company PDVSA, which is currently subject to US sanctions.

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Treasury amended an April 28 deadline for this wind down to an 18-month deadline, which will renew each month.

The 18-month extension "will enable Citgo to maintain operations in markets that are based on long-term planning and contractual commitments," Treasury said in a statement.

Larry Elizondo, a Citgo spokesman, declined to comment Thursday.

Citgo is in the process of cutting its ties with PDVSA, in order to avoid US sanctions.

On January 28, the US unveiled sweeping sanctions on PDVSA, Venezuela's state-owned oil company, imposing an immediate ban on US exports of diluent to Venezuela and requiring payments made to PDVSA to be through blocked accounts, setting up a de facto ban on US imports of Venezuela crude.

The US has also announced that transactions between non-US firms and PDVSA which involve the US financial system or US commodity brokers would be prohibited after April 28.

US sanctions on Venezuela have halted Citgo's primary source of crude for its US refineries, but will not significantly slow the company's operations, Luisa Palacios, Citgo's new chairwoman, said Tuesday at CERAWeek by IHS Markit in Houston.

"It's a shock, but it's one that we are very well placed to weather," Palacios said.

Citgo has been developing contingency plans "for months," in preparation for the sanctions, Palacios said.

Citgo, which imported about 176,000 b/d of Venezuelan crude before sanctions on PDVSA were imposed, imported 68 different types of crude from 19 different countries in 2018, she said.

Roughly 66% of Citgo's crude is sourced in North America, the majority in the US, she said.

-- Brian Scheid, brian.scheid@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com