Venezuela’s efforts to stay afloat financially have suffered another blow after a judge in the US gave a Canadian mining company permission to seize the shares of the Venezuelan holding company that owns Citgo, a US oil refiner with gas stations across the US. The judge on Thursday ruled that Canada’s Crystallex has the right to claim the shares of PDV Holding Inc to compensate it for around $1.4bn it is owed by the Venezuelan state.
The case dates back to 2011 when Venezuela nationalized Las Cristinas, a gold reserve owned by Crystallex. The Canadian company took Venezuela to the World Bank’s international arbitration tribunal ICSID and won, but Venezuela refused to pay up. Crystallex, therefore, went after Citgo as compensation, arguing that PDV Holding Inc, which is owned by Venezuela’s state-owned oil company PDVSA, is essentially an “alter ego” of the Venezuelan state.
The case is one of many arbitration cases involving Venezuela and foreign companies. Earlier this year US oil company ConocoPhillips tried to seize PDVSA assets in the Caribbean, including products stored at its Isla refinery on the island of Curaçao. Citgo is the jewel in the crown of PDVSA’s foreign holdings. The Houston-based company not only operates gas stations but has three refineries in the US with a capacity to refine 750,000 barrels of crude a day. It also produces lubricants which are vital for Venezuela’s refining of its heavy crude.
Ángel Alvarado, a Venezuelan opposition member of Congress and an economist, said Thursday’s decision was an even bigger blow to PDVSA that the ConocoPhillips move “because it will seriously affect the import of diluents from the US, one of the raw materials for the extraction of heavy and extra-heavy crude.”