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A deal to give Russia's Rosneft 49.9% ownership of US refiner Citgo if Venezuela's cash-strapped national oil company PDVSA defaults on its loans threatens US national security and should be investigated by the Committee on Foreign Investment in the United States, two US congressmen have said.

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"This would give Russia clear control over the sixth-largest refinery in our country, the ability to impact gas prices for the American people, and a strategic advantage over US freedom of action globally," Representative Jeff Duncan, Republican-South Carolina, said in a statement Thursday.

Duncan and Representative Albio Sires, Democrat-New Jersey, asked US Treasury Secretary Steven Mnuchin, CFIUS' chairman, in a letter Thursday to investigate the deal. They are the top members of the House Committee on Foreign Affairs' Western Hemisphere subcommittee.



CFIUS is an inter-agency committee that scrutinizes foreign investments for national security implications.

Related: Find more content about Trump's administration in our news and analysis feature.

In November, PDVSA assigned as collateral to Rosneft "all of debtor's right, title and interest in the equity interests" of 49.9% of Citgo Holding, according to a Delaware corporate filing.

PDVSA made the lien in exchange for a $1.5 billion loan from Rosneft, Duncan and Sires said.

It used the other 50.1% share in Citgo as collateral in its $2.8 billion bond swap deal in October.

"In the event that the Venezuelan government defaults on its debt obligation to Rosneft, the Russian government could readily become the second-largest foreign owner of US domestic refinery capacity," the congressmen's letter said.

"Such a development would give the Russians more control over oil and gas prices worldwide, inhibit US energy security and undermine broader US geopolitical efforts."

Citgo's refining capacity includes 425,000 b/d in Lake Charles, Louisiana; 167,000 b/d in Lemont, Illinois; and 157,000 b/d in Corpus Christi, Texas. The refineries process 204,000 b/d of Venezuelan crude, according to the company.

Citgo also owns or operates 48 oil product terminals in the US, with its branded fuels available at more than 5,000 retail stations.

--Meghan Gordon, meghan.gordon@spglobal.com

--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com