ConocoPhillips Wants CITGO Sale Probe

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ConocoPhillips Wants CITGO Sale Probe


HOUSTON — ConocoPhillips filed a lawsuit in Texas State Court against Petróleos de Venezuela SA (PDVSA) regarding the potential sale of its CITGO Petroleum Corp. division in the United States.

Houston-based ConocoPhillips stressed it is not trying to prevent PDVSA's sale of CITGO. However, the oil company asked Texas State Judge Caroline Baker to put any proceeds from the sale of CITGO under the control of a Texas court, using a state law that prohibits debtors from hiding assets. The company also asked Baker to order CITGO to turn over documents and answer questions under oath on whether it secretly continued to try to sell CITGO after Venezuelan denials, reported Bloomberg.

ConocoPhillips made these requests as it believes PDVSA has a plan to hide the proceeds from the CITGO sale and avoid paying compensation for assets that were nationalized by former Venezuelan President Hugo Chavez in 2007, according to the news outlet.

As CSNews Online previously reported, PDVSA hired Lazard Ltd. to conduct a sale of CITGO, with the company seeking at least $10 billion in compensation. In a July bond offering, its assets were valued at $8.1 billion.

CITGO has many convenience store and gas station assets, as well as oil refineries, pipelines and terminals.

The potential CITGO sale is controversial in Venezuela, with varied opinions regarding whether PDVSA will actually sell its U.S. division. According to various reports, PDVSA called off the potential sale in October, but reintroduced the bidding process in November.

In response to ConocoPhillips' lawsuit, PDVSA lawyer John Zavitsanos would not confirm whether a CITGO sale will take place or not. However, he argued during a recent hearing that ConocoPhillips' legal action would "spook off any potential buyer" because of being "totally freaked out about being brought into" the court case.

“They’re trying to do an impermissible end-around” to stake a claim on the assets of a foreign government, before a trial can be held, Zavitsanos told Bloomberg. “What they’re talking about here they cannot do” under U.S. laws protecting sovereign governments from corporate attacks on overseas assets.