Citgo Avoids a Shutdown With U.S. Treasury Deadline Extension - EcoFinBiz Blog

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Citgo Avoids a Shutdown With U.S. Treasury Deadline Extension

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(Bloomberg) -- Citgo Petroleum Corp., the U.S. refiner owned by Venezuela, is avoiding a total shutdown after the U.S. Treasury extended its license to engage in business with U.S. persons and companies, a step that’s fundamental for the Houston-based company to continue to operate.

Without the extension, operations at Citgo, which is now under the administration of the opposition in Venezuela led by Juan Guaido, would grind to a halt, as the company wouldn’t be able to sell fuels to U.S. companies or even buy a pen from a U.S. person. That would threaten to cut off about 4 percent of American fuel-making capacity.

The extension of the deadline was expected and will allow Citgo to “operate profitably without too much trouble,” Rice University’s Francisco Monaldi, a Venezuelan-born expert on energy politics, said in a phone interview Friday.

Under a set of sanctions released at the end of January, Citgo -- which at the time was indirectly controlled by the government of embattled president Nicolas Maduro -- had an authorization to interact with U.S. companies or persons until July 27.

The deadline was extended for 18 months after a team appointed by Venezuela’s National Assembly leader Guaido officially took the reins of the company in February, according to a general license issued by the Treasury Department’s Office of Foreign Assets Control.

Citgo operates three refineries in the U.S. with combined capacity to process almost 755,000 barrels of oil a day, or about 4 percent of the U.S. fuel-making capacity. It operates more than 40 petroleum terminals in the U.S. and sells fuels to 5,300 Citgo-branded gas stations.

To contact the reporters on this story: Lucia Kassai in Houston at lkassai@bloomberg.net;David Wethe in Houston at dwethe@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Christine Buurma

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