U.S. oil refiner Citgo, which is majority owned by Venezuela’s socialist government, is considering filing for bankruptcy amid an ongoing fight over control of oil revenues – and political leadership – in the poverty-stricken country.
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Bankruptcy is one option executives and advisers at the large U.S. refiner are weighing to protect its assets as control over funding stirs global tensions between Washington and Caracas, The Wall Street Journal reported on Thursday, citing people familiar with the matter. The U.S. is attempting to shift control of Venezuela’s energy assets from disputed President Nicolás Maduro to opposition leader Juan Guaidó, who has been sworn in – and recognized by the U.S. – as the once-wealthy nation's leader.
Filing for bankruptcy would allow the company to stabilize operations and restructure its debt in a court-protected forum even though its financial pressures aren’t necessarily critical, the Journal reported.
In a statement to FOX Business, Citgo denied the report, saying it had no intention of entering into bankruptcy proceedings.
"Financially, 2018 was one of the strongest earnings records in the last ten years. We continue to maintain a strong balance sheet, flat debt levels and liquidity of more than $1 billion into the new year,” a spokesperson for the company said.
Creditors have been circling Citgo in an effort to get payments out of Venezuela. They are concerned about their interests amid the Trump administration’s recent actions.
Earlier this week, the White House announced sanctions on state-owned PDVSA, as the state-owned oil company is known, aimed at cutting off Maduro’s access to Venezuela’s assets. It said Citgo would be permitted to continue operating in the U.S. so long as money goes into a blocked account that Maduro cannot access.
Opposition leader Juan Guaidó told FOX Business’ Trish Regan in an exclusive interview on Tuesday night that the protection of assets, supported by the U.S., is “very important” and one of his goals is to help protect the country’s oil industry in order to make it “prosperous again.”
In the U.S., Citgo’s three Gulf Coast refineries have the capacity to process about 760,000 barrels of oil a day. The Lake Charles facility in Louisiana is PDVSA’s largest refinery outside of Venezuela.
Oil revenue, specifically from exports to the U.S., accounts for a majority of the country’s income in hard currency. More than 40 percent of Venezuela’s exports went to the U.S. in 2017, while during the last fiscal year the U.S. imported 505,300 barrels per day. The U.S. is one of the few customers that still gives cash payments for Venezuela’s oil exports. Exports to China and Russia are largely considered loan repayments.