HomeEconomyOilOilers ask for a National Energy Agreement to prevent Citgo embargo

Oilers ask for a National Energy Agreement to prevent Citgo embargo

The Latin American Association of Oil Businessmen of Texas proposes the creation of a Committee of victims of the Citgo embargo to request the President of the United States, Joe Biden, to delay the execution process.

The president of the Latin American Association of Oil Businessmen of Texas (Alep), Alejandro Terán Martínez, considers that a National Energy Agreement should be held in Venezuela as well as a Committee of victims of the embargo on Citgo, to request the president of the United States (USA) ), Joe Biden, delay the execution process of the Venezuelan subsidiary of PDVSA.

In his opinion, if the embargo on the company is carried out due to non-payment of oil bonds, the North American state itself “would be scoring an own goal,” because Citgo is one of the main refineries located in the country with the distribution network. largest fuel tank that serves the entire country.

Citgo is at risk of being seized due to the country's non-payments, a situation in which a group of creditors has seizure orders that, to be executed, require authorization from the Office of Foreign Assets Control (OFAC).

Terán insists that the main interested party in issuing these protection orders to prevent the Citgo embargo from being executed is the US government itself. “Because if it happens, they are going to dismantle it and it would lose the fuel refining capacity, which is a terrible crisis that the US is having right now, which has just imported 4 million barrels of fuel at this moment,” he commented.

On the other hand, the lawyer, Terán Martínez, explained to Últimas Noticias that oil workers, as victims of the action against Citgo, can request from the North American government what is called “a state of delay”, contemplated in Chapter 11 established in North American laws, referring to the types of bankruptcy to which which organizations can benefit from.

“Bankruptcy occurs when a company owes more than it is worth, but of course, this is not the case with Citgo, because this company is worth much more than what it owes. Financial reorganization corresponds to Chapter 11, which is what American Airlines, Bank of America, and Chase Manhattan Bank did, to cite some examples of companies that used this procedure to reorganize and go into a readministration process. This is what suits Citgo,” he explained.

However, the lawyer says that the matter focuses on who has the power to make this request for the so-called “delay status” since it is a Venezuelan company based in the United States.

Terán explained that only those who have that attribution are:

1.- The creditors, that is, the bondholders.

2.- The owner of the owner

3.- An interested third party, such as workers in the oil industry

The president of Alep assures that a large majority of the oil bonds are in the hands of North American banks, since it is convenient for the creditors to execute the embargo on Citgo and thus obtain greater benefits from the company. For this reason, he insists that oil industry workers can play a fundamental role in requesting the state of arrears to the president of the United States, “who is the only one who can reactivate the executive decree for asset protection, which was already established by the Trump administration.

On the other hand, given the restrictions implied by the sanctions imposed on Venezuela and because the US institutions do not recognize the legitimacy of the Government of Nicolás Maduro, Venezuela, as owner of Citgo, cannot legally request the status of delay for the administrative reorganization of the company. company.

This Monday, the opposition candidate Antonio Ecarri asked President Biden to postpone any sale of the company, a subsidiary of the state oil company Pdvsa. “That is viable, but in any case, what Biden can do is an executive order to protect assets, Terán said. “My question is why the Guaidó “government” did not request it at the time since it was “recognized” by the US government. Why didn't he demand the annulment of this process? “He asked himself.

“What Ecarri proposes can be developed within the framework of Chapter 11, which can only be requested by the bondholders, who, I insist, are not interested because they are aiming for seizure, but when the holders went to execute, they realized Note that US$19.000 billion dollars were missing from the Delaware ruling, and there is no money to support that. There is also no way to pay the bonds because the country's money is also frozen by the sanctions. In this way, there is a blocked game that has been created by these opposition gentlemen, a legal trick that only they understand will end in the dismantling of Citgo, but despite that, the company is generating dividends," he highlighted. Terán Martínez.

Terán commented that Guaidó and his attorney, José Ignacio Hernández, used the doctrine called Alter ego, even when the so-called “corporate veil”, with strong roots in US commercial jurisprudence, thus preventing the nation from defending Citgo's interests.

“It makes no sense that Citgo would not have requested a state of arrears, nor do the holders of the shares, it makes no sense that they do not do so, so it is concluded that the holders are betting on Citgo's execution,” he insisted.

Terán recalled that the former chancellor, Jorge Arreaza, at the time, denounced Juan Guaidó as the person responsible for forging the illicit appropriation of Citgo, which was carried out by someone who was also a lawyer for Crystallex and later appointed Attorney of his former government, José Ignacio Hernández, with the aim of facilitating the delivery of the assets of the Venezuelan people to the United States, through a gigantic procedural fraud and attacking the Venezuelan constitutional order.

Terán also highlighted that the National Assembly appointed a special commission to investigate the Citgo theft, whose report is in charge of the president of this body, deputy Pedro Infante, in which the Association of Oil Businessmen participated to give their contributions in this regard.

Bonds at skinny goose prices

Terán recalled that Venezuelan oil bonds were issued between 2006 and 2015 with two objectives: there was a large surplus because the price of a barrel was US$150 and the government decided to issue close to US$62.000 million, as well as US$32.000 in a second stage, because they were going to be used in the growth of the oil industry, “effectively employed in a good part of it,” he said.

But in his opinion, the issuance of those bonds at 14% interest "was outrageous" - and in addition, they were issued "at a preferential rate", that is, at U$2.150, the price of the dollar at that time.

“In this way, the brokerage houses were able to obtain a large amount of bonds and traded them in the US. Thus, the vast majority of the bonds ended up in the hands of North American banks,” he commented.

He explained that as a result of the problem with Venezuela, the blockade and the sanctions, the net present value of these bonds was taken away and they became worthless.

“I call this process the oil Cadivi, because a bond was purchased at a preferential price and negotiated at an international value. Subsequently, Trump expropriates Citgo and the discussion begins whether or not to pay the oil bond debt. That is when the North American government issues the first protection order to Citgo to prevent its execution, which although the judge has given the delay for it to be executed, the Biden government now continues to avoid it and must continue to do so, because they are the most harmed, so they are confronting the banks and the oil companies themselves,” Terán warned.

In the US, Citgo has the Lake Charles refineries in Louisiana, CorpusChristi in Texas and Lemont in Illinois; complex of pipelines and service stations, among other assets that together have a capacity to refine 750 thousand barrels of crude oil daily.

It is estimated that the value of Citgo is close to US$40.000 million and the debt of the bondholders is around US$32.000 million to execute, to which is added Cristalex and all the arbitrations that are pending, as well as the US$19.000 billion claimed by the Delaware court, which were administered by Juan Guaidó.

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