Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil

Citgo broadens oil import sources, creditors loom

Oil | Crude Oil | Refined Products

Will Citgo’s US refineries be seized by creditors?

Oil

Platts Market Data – Oil

Oil | Crude Oil | Refined Products | Equities | Financial Services | Private Markets

North American Crude Oil Exports Summit, 2nd Annual

Natural Gas

DTE Midstream to buy gathering assets in Haynesville Shale for $2.25 billion

Citgo broadens oil import sources, creditors loom

Highlights

Guaido wants US order for creditor protection

Three US refineries could be seized

Imports slump at Citgo's US Gulf Coast refineries

Washington — Citgo was able to quickly respond to a de facto ban the US imposed on crude trades with its parent company PDVSA in January, immediately boosting imports from Canada, Latin America and West Africa at its US refineries, the company's chairwoman said Wednesday.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

"That's one of the things that we managed and I think we managed it very successfully," said Luisa Palacios, Citgo's chairwoman, during an energy conference hosted by the Inter-American Dialogue.

But looming bond payments and a push by creditors to seize the company could soon spell the end of the Juan Guaido shadow government's brief control of PDVSA's US subsidiary.

"There's a world of creditors that very much want to get their hands on Citgo," said Risa Grais-Targow, director, Latin America, with the Eurasia Group. "It's [PDVSA's] one foreign asset and this is a government that owes a lot of people a lot of money."

Most pressing is a more than $900 million bond payment due later this month on PDVSA's 2020 bond, backed by a majority stake in Citgo. Control of the company's US assets, including complex refineries in Lake Charles, Louisiana, Corpus Christi, Texas, and Lemont, Illinois, are at stake.

Guaido, who is the leader of Venezuela's National Assembly and recognized by the US and other countries as Venezuela's legitimate leader, has pressed the Trump administration for an executive order that would protect Citgo from creditors and pursued a similar option with the United Nations, so far without success.

Palacios said Wednesday that Citgo has pursued an aggressive campaign to consolidate its debt, including replacing maturing $1.2 billion lines of credit with a five-year, $1.2 billion term loan, and $1.87 billion in bonds with a four-year term loan and five-year bonds.

Still, she said that it was unclear why the Trump administration would not issue such an order, since the debt is a "legacy" issue created by President Nicolas Maduro.

Such a decision would "save Citgo from Maduro's bondholders," she said.

Grais-Targow said that if the Guaido government cannot make payment on the 2020 bond, it may be able to restructure the debt with some bondholders. "But there's other claimants that want Citgo," she said.

On Monday, the US Court of Appeals for the 3rd Circuit ruled that Crystallex, a defunct Canadian gold mining company, could seek PDVSA's shares in Citgo to collect on a $1.2 billion judgment that followed Venezuela nationalizing a gold mine.

CHALLENGING ENVIRONMENT

Palacios said Citgo still represents roughly 10% of total finished product exports out of the US Gulf Coast, but said this year has been a challenge for the company, primarily because it lost its biggest customer, PDVSA, when the US imposed its sanctions in January. But other factors, including the decline in Mexican crude output and production cuts in Alberta, have caused a supply crunch for heavy crudes.

"This is not the best environment, particularly for the type of refineries that we have," she said.

Palacios said Citgo's three refineries still source roughly half of their crude from the US, but have relied on some new suppliers since it lost access to Venezuelan crude in January, which accounted for about a quarter of its inputs.

Citgo has increased imports of heavy crude from Canada by about 4% so far this year compared with 2018, climbing from an average of nearly 159,800 b/d in 2018 to an average of about 165,700 b/d through the first seven months of 2019, according to the US Energy Information Administration. But that increase is taking place entirely at Citgo's Lemont, Illinois refinery, which has a 167,000 b/d capacity.

Imports of crudes at Citgo's Lake Charles and Corpus Christi refineries are down about 32% and 41%, respectively, so far year on year in 2019, the latest EIA data shows.

While these refineries are taking additional cargoes from Colombia, Trinidad and Tobago and Brazil, imports at the Lake Charles facility fell from nearly 140,800 b/d in 2018 to 95,900 b/d so far this year, and imports at Corpus fell from 109,000 b/d to nearly 64,000 b/d, according to EIA.

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

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

Oilgram News

Platts Oilgram News brings fast-breaking global petroleum and natural gas news every day covering supply and demand trends, corporate news, government actions, exploration, technology, and much more. Click on the link below and we will set you up with a free trial.

Free Trial