Venezuela faces a critical juncture as it risks losing ownership of Citgo, a cornerstone of its oil industry and once a significant asset for the nation. Acquired by the Venezuelan state in 1990, Citgo has been embroiled in a legal battle in U.S. courts for the past seven years, initiated by creditors seeking compensation totaling $21.3 billion. These claims stem from expropriations and debt defaults during the Chavismo era.
Recently, a federal court in Delaware opened a second bidding round for Citgo’s shares, despite appeals from Pedro Tellechea, president of Petróleos de Venezuela (PDVSA), Citgo’s ultimate parent company. Tellechea denounced the auction as an affront to Venezuela’s sovereignty, asserting that the country was not given a chance to defend its ownership of the asset.
In response, Venezuelan official media has portrayed the auction as a coercive act of “imperialist dispossession,” blaming the United States and Venezuela’s opposition for the potential loss. The narrative highlights the period of Juan Guaidó’s interim government (2019-2021), during which the U.S. recognized his administration and allowed it to manage Venezuelan assets abroad, including Citgo. This move intensified the geopolitical and legal complexities surrounding Citgo’s ownership.
The Delaware court’s recent findings implicated Guaidó’s administration in misusing Citgo’s resources for political activities, which further fueled controversies about the management of Venezuelan assets abroad. Horacio Medina, president of PDVSA-ad hoc, vehemently denied these allegations, arguing that Citgo under Guaidó’s administration generated significant profits, contrary to the court’s claims.
The roots of Citgo’s predicament trace back to Hugo Chávez’s aggressive nationalization policies between 2007 and 2012, which targeted foreign-owned assets. This included the expropriation of the Las Cristinas gold deposit, leading to lawsuits and debt obligations that eventually entangled Citgo in legal battles. Subsequent financial maneuvers, such as pledging Citgo shares as collateral for loans from entities like Rosneft and bondholders, exacerbated the situation amid Venezuela’s economic turmoil and international sanctions.
Despite criticisms of the Guaidó administration’s handling of Citgo, analysts emphasize that the primary responsibility lies with Chavismo’s policies and the failure to devise a robust strategy to safeguard national assets amidst internal disputes. As Venezuela faces the prospect of losing Citgo, valued at $13 billion, it confronts profound economic and geopolitical implications that could further strain its already precarious financial state.
In summary, the potential loss of Citgo underscores Venezuela’s turbulent economic history, marked by geopolitical conflicts, legal battles, and financial mismanagement. As the auction proceeds under U.S. court jurisdiction, the fate of Citgo remains uncertain, posing significant challenges and uncertainties for Venezuela’s economic future.