Thursday, December 22, 2016

Maduro Hocks the Crown Jewels to Russia

from the Latin American Herald Tribune
CARACAS - A Delaware Uniform Commercial Code (UCC) filing against Citgo parent PDV Holding, Inc. on November 30 reveals that Venezuela has secretly mortgaged their Citgo refineries in the United States to Russia's Rosneft in exchange for cash.

Redd Intelligence uncovered the UCC filing and broke the news.

CITGO - A Strategic Asset?

PDV Holding Inc., owned by Venezuela state oil company Petroleos de Venezuela, S.A. (PDVSA), owns Citgo Holding Inc., which in turn, owns Citgo Petroleum Corporation, which has 3 refineries and pipelines throughout the United States.

The lien means that should Citgo or PDVSA default, Russia's state controlled oil company Rosneft could end up owning strategically important oil refineries in the United States.

Citgo owns oil and gas pipelines throughout the country as well as oil refineries in Corpus Christi, Texas; Lake Charles, Louisiana; and Lemont, Illinois (outside of Chicago). Citgo's refineries can refine 749,000 barrels per day and the Lake Charles refinery is the sixth-largest refining facility in the U.S.

The UCC filing is used to protect creditors. According to the copy obtained by the Latin American Herald Tribune, the UCC "Financing Statement" was filed by "secured creditor" "Rosneft Trading S.A., Place du Lac, 2, Geneva, ZZ 1204" on November 30.

Steven Bodzin, one of the leading investigative reporters on Latin America who uncovered the filing and broke the story for REDD Intelligence, reported that cash-strapped PDVSA mortgaged 49.9% of Citgo to Rosneft for a $1.5 billion loan.

CITGO MORTGAGES 50.1%

In October, in addition to a 20% bonus, PDVSA used 50.1% of Citgo Holding Inc. as collateral to induce $2.8 billion of holders of debt maturing within the year to extend into a new 4 year bond. Should PDVSA default, the holders of the new $3.4 billion PDVSA 8.5% of 2020 would be able to take 50.1% of Citgo Holding Inc.

On October 30, Venezuela's reserves went up $891 million, according to the Venezuela Central Bank, and analysts were unable to account for it. PDVSA was late paying the almost $3 billion in bond debt that it owed in November, with the last $146 million that was due on November 17 being paid 2 weeks late on November 30 and December 1.

Eulogio del Pino, PDVSA head along with Venezuelan Foreign Minister Delcy Rodríguez met on November 20 with the head of Russia’s Rosneft Igor Sechin to "strengthen the cooperation agenda between the two oil companies."

“We continue consolidating strategic alliances between Pdvsa and Rosneft. Important meetings will be held in the next hours,” Del Pino posted on his Twitter account.

Del Pino also met with Rosneft Vice-President Eric Maurice Liron to track joint projects, according to Venezuela's state-run news agency AVN.

Rosneft is a minority shareholder in five joint crude oil-producing companies: Petro Miranda, Petro Victoria, Petro Perijá, Petro Monagas and Boquerón.

RUSSIA'S EXPANDING ENERGY FOOTHOLD

In 2010, Venezuela President Hugo Chavez sold PDVSA's stakes in 4 Ruhr oil refineries in Germany to Rosneft for $1.6 billion, giving Rosneft a key foothold in the European market.

Founded in 1992, Rosenft became the world's biggest oil and gas producer by volume (5.2 million barrels per day) through acquiring others. In 2004, Rosneft took over competitor Yukos after Vladimir Putin jailed Yukos head Mikhail Khodorkovsky, and in 2013 Rosneft took over TNK. BP owns almost 20%.

The Russian government owns 69.5% of Rosneft
, and Rosneft head Igor Sechin is a long-time ally of Russian President Vladimir Putin.

In October, Rosneft acquired Indian refiner Essar Oil in a $13 billion deal. The transaction included India's second-largest refinery at Vadinar (400,000 bpd), as well as port terminals, power plants and pumps.

Rosneft also recently took a stake in an Egyptian gas field worth as much as $2.8 billion.



CITGO SUED FOR FRAUDULENT TRANSFER

Citgo is already being sued in Delaware in separate suits by both ConocoPhillips and Crystallex under Delaware's Uniform Fraudulent Transfer Act, alleging that Citgo, PDVSA and Venezuela "fraudulently transferred" $2.8 billion in wealth out of the country to avoid billions of dollars of claims by creditors.

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