Venezuela condemns US court approval of $5.9bn Citgo sale as “barbaric dispossession”

Venezuela has slammed a US court decision authorising the sale of oil refiner Citgo to settle billions of dollars in debt, calling the move "fraudulent" and a violation of its sovereign assets.

Vice President and Oil Minister Delcy Rodriguez on December 2 denounced Delaware Judge Leonard Stark's approval of a $5.9bn bid from Amber Energy, an affiliate of hedge fund Elliott Investment Management, for Citgo's parent company PDV Holding, part of Venezuela’s state oil company PDVSA.

The Venezuelan government said it energetically rejected the decision and would not recognise the forced sale.

"This act constitutes a vulgar and barbaric dispossession of a Venezuelan asset," Rodriguez said in a statement broadcast on state television, accusing the Donald Trump administration of manipulating the judicial process and excluding Venezuela from its right to defence.

The sale concludes an eight-year legal battle involving 15 creditors seeking nearly $19bn following Venezuela's asset expropriations and subsequent bond defaults. Citgo, a Houston-based subsidiary and the seventh-largest refiner in the United States, has been state oil company PDVSA's (Petroleos de Venezuela, SA) most prized foreign asset. The company faces claims totalling more than $20bn from creditors.

Among those creditors is Canadian mining firm Crystallex, which a US court ruled was owed $1.2bn by Venezuela in 2019 following Caracas's 2008 nationalisation of the Las Cristinas mine containing gold, diamonds, iron and valuable minerals.

Judge Stark's ruling overrode outstanding objections and departed from a recommendation made in August by court officer Robert Pincus after late-stage bidding prompted competing offers. He wrote that Amber's proposal "offers the best overall combination of price and certainty of closing of any bid submitted," calling the process both fair and balanced. Elliott Investment Management said in a press release that the court order was backed by strategic US energy investors.

Amber's bid includes a $2.1bn payment aimed at settling claims from holders of a defaulted Venezuelan bond secured with Citgo shares, viewed as a critical hurdle in transferring ownership.

However, Venezuela disputes the valuation, with government representatives arguing Citgo's true worth exceeds $18bn. Court adviser Evercore estimated the company's value at approximately $13bn, substantially higher than the approved sale price of $5.9bn.

The regime-controlled Venezuelan National Assembly on December 2 unanimously condemned what it termed the "illegal" sale and proposed revoking the citizenship of “far-right” opposition figures it accused of facilitating the transaction.

Assembly President Jorge Rodriguez identified former opposition leader Juan Guaido and several associates as responsible for what he called a "gigantic theft", urging sanctions against 351 individuals allegedly involved.

Rodriguez argued that Venezuelan law “requires citizens to honour and defend the homeland, and those failing this duty were unworthy of citizenship.” The assembly also proposed applying asset forfeiture laws against those implicated.

Venezuela accused Guaido's parallel government, recognised by the Trump administration in 2019, of artificially inflating the country's debt to make repayment impossible and enabling creditors to seize Citgo. The government claimed that prior to 2019, Venezuela had met its payment obligations and Citgo was not over-indebted.

The sale comes amid escalating tensions between Washington and Caracas, with President Nicolas Maduro claiming that recent US military activity in the Caribbean, officially targeting drug trafficking networks, is actually aimed at “stealing” Venezuela's vast oil reserves.

American military assets now deployed to the region include the USS Gerald R. Ford aircraft carrier, along with warships, combat aircraft and US personnel totalling approximately 15,000. Maduro has denounced the buildup as a strategy to oust him from power.

The leftist autocrat last week called on fellow members of the Organization of the Petroleum Exporting Countries (OPEC) to help counter "growing and illegal threats" from the United States.

Venezuela holds the world's largest proven oil reserves at 303bn barrels, yet it exported just $4.05bn worth of crude in 2023, partly due to sanctions imposed during Trump's first presidency. But the country's oil sector has also long faced challenges such as ageing infrastructure, widespread corruption, underinvestment and mismanagement.

Toronto-listed miner Gold Reserve, whose competing bid had been previously recommended by the court officer, said it disagreed with the ruling. The company criticised the auction as "plagued with significant conflicts of interest, including the $170mn in fees collected by the special master's advisors from affiliates of Elliott and the 2020 bondholders involved in Elliott's bid."

Gold Reserve said it would consider all available avenues to challenge the decision.

Amber Energy chief executive Gregory Goff, who intends to take charge of Citgo following the transaction, said the company planned to "strengthen the business through capital investment and operational excellence" whilst maintaining Citgo's brand and operations as a refiner.