Trump's oil strategy for Venezuela leaves Citgo auction in limbo

By Marianna Parraga

HOUSTON, Jan 9 (Reuters) - As U.S. President Donald Trump moves quickly to put together a $100 billion effort to revive Venezuela's oil industry, the administration has yet to finalize the fate of the crown jewel of the country's foreign assets, U.S. refining company Citgo Petroleum, sources close to the matter said.

Houston-based ​Citgo has been tied up in the lengthy auction of its parent, PDV Holding, organized by a Delaware court to pay billions of dollars to creditors for ‌debt defaults and expropriations in Venezuela.

In November, the court approved a $5.9 billion bid and ordered the sale of Citgo parent's shares to Amber Energy, an affiliate of U.S. hedge fund Elliott Investment Management, but its execution still needs ‌regulatory approvals, particularly from the U.S. Treasury Department.

The Treasury's Office of Foreign Assets Control (OFAC) has six months until the end of May to either approve or reject the auction's winner, temporarily putting the process on hold.

A strategy for Citgo has become a "sticky" topic, the sources said, in the wake of the U.S. capture of President Nicolas Maduro. The U.S. has since said it would take control of Venezuela's oil resources indefinitely.

After the rapid changes in Venezuela, the many conflicting parties involved in the complex auction are raising their voices and expanding their lobbying to influence Washington's course of action on Citgo, ⁠with some asking for the auction to be executed and others ‌wanting the process frozen.

Boards controlled by Venezuela's political opposition that oversee the refiner have unsuccessfully pushed for meetings with U.S. officials since early January, two of the sources said.

But the message those boards have received from Washington through indirect channels is that the company's fate is not a ‍priority for Trump's administration right now. Some U.S. officials have said that Washington would prefer the refiner to be run by an American company, one of the sources said.

The eight-year-old case, where creditors including expropriated foreign oil and mining companies and defaulted noteholders are collectively claiming some $19 billion, has been fraught, triggering many appeals and injunctions.

How much influence each party will have as Trump advances his agenda and supports Maduro's ​ally Delcy Rodriguez as interim president is yet to be seen. His relationship with the opposition, especially with leader Maria Corina Machado, seems fragile for now, the sources added.