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 state-controlled oil company Rosneft.
Redd Intelligence uncovered the UCC filing and broke the news.
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 and pipelines 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.
Rosneft, it appears, cut PDVSA a check for $1.5 billion against 49.9 percent of Citgo. Which wouldn’t necessarily be a problem, except for this minor detail:
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 PDVSA debt maturing within the year to extend into a new 4 year amortizing bond. As a result, 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.
So 100 percent of Citgo is now in hock. This does not strike me as a Good Sign.
(Via Fausta Wertz.)