It's a month old story we somehow missed.Rosneft, an oil corporation majority-owned by the Russian government, says it has the right to claim an ownership stake in U.S. oil company Citgo Petroleum if Citgo’s cash-strapped parent company defaults on billions in loans, according to a lien Rosneft recently filed in Delaware. If that claim succeeds, Rosneft, which is run by one of President Vladimir Putin’s closest allies, would own a sizable chunk of a company that is among the 10 largest petroleum refiners in America.
Russian ownership of a large portion of a U.S.-based oil company would be unprecedented, according to experts contacted by CBS News. Those experts also emphasize that the White House has the power to block the deal -- either on national security grounds or simply by leaving in place Obama administration sanctions against Russia.
Citgo’s parent company, the Venezuela state-owned PDVSA, pledged a 49.9 percent stake in Citgo to Rosneft as collateral for a $1.5 billion loan signed on Nov. 30. That same day, attorneys for Rosneft filed the lien with the Delaware Department of State, asserting that Rosneft — whose CEO, Igor Sechin, has long been considered Putin’s right-hand man — would claim the collateralized 49.9 percent if the struggling Venezuelan debtor defaults or folds.
A PDVSA default in the near future would not be a surprise, said Praveen Kumar, who is the executive director of the Gutierrez Energy Management Institute at the University of Houston’s Bauer College of Business.
In fact, credit rating agency Fitch reported in January that a default at PDVSA is probable. And in September, another credit rating agency, Standard & Poor’s, downgraded PDVSA to a CCC rating -- near the bottom of the junk-bond ladder -- after a complex bond swap that Standard & Poor’s called “tantamount to default.” Meanwhile, Venezuela, reeling from the global collapse in oil prices since 2014, has less than $10.7 billion remaining in foreign reserves, down from $30 billion six years ago, according to the latest data from the country’s central bank.
Kumar, whose research focuses on energy finance, said a default would leave the door open for Rosneft to seize the promised stake in Citgo, a company whose U.S. holdings include three refineries and three pipelines.
More:
http://www.cbsnews.com/news/rosneft-russian-oil-could-claim-us-oil-trump-cfius/
