Washington — The US Department of the Treasury on July 15 again extended for three months an order preventing creditors of Venezuela's state-owned oil company PDVSA from taking control of US refiner Citgo as a result of missed payments on its 2020 bonds.
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The license, which was set to expire July 22, now runs until October 20, Treasury said.
PDVSA missed a key payment on the 8.5% bonds in October 2019, setting up the possibility of losing US refiner Citgo, its most valuable overseas asset.
In several lawsuits working their way through US courts, Venezuela's creditors have tried to collect on old debts by seizing Citgo assets.
In November, the 3rd US Circuit Court of Appeals in Philadelphia upheld a decision allowing defunct Canadian miner Crystallex to auction shares in Citgo to collect on a $1.2 billion judgment related to Venezuela nationalizing its gold mine. The US Supreme Court in May declined Venezuela's request to reconsider the ruling.
While the US appeals court decision stands, any creditor seeking to seize Citgo assets would need specific approval from Treasury's Office of Foreign Asset Control.
The Trump administration has shown an interest in blocking that from happening because it would deal a severe blow to the interim administration of Juan Guaidó.
Treasury has encouraged PDVSA and bondholders to keep negotiating a plan to restructure or refinance the debt, saying OFAC would have a "favorable licensing policy toward such an agreement."
June output collapse
Venezuelan oil production collapsed to 280,000 b/d in June, just over half of its May output, according to the latest S&P Global Platts survey of OPEC production, as operations with international joint venture partners nearly ground to a halt.
In April, the Trump administration banned Chevron and four US service companies from producing, moving or selling Venezuelan oil immediately and ordered them to wind down all other activities in the country by December.
The producers had been operating under a Treasury waiver that was extended many times since US sanctions were imposed in January 2019.
S&P Global Platts Analytics expects Venezuelan supply to be capped at 300,000 b/d through the end of 2021, since most international buyers ceased deals with PDVSA after the departure of Russia's Rosneft and tightening US sanctions that have cracked down on shipping companies facilitating the country's exports.