The forced sale of CITGO Petroleum Corporation, the crown jewel of PDVSA abroad, has turned into a high-stakes chess game among creditors, political operatives, U.S. regulators, and investment funds. With over $19 billion in judgments against the Venezuelan state, and a final ruling from the Delaware court expected in August 2025, the fate of Venezuela’s most crucial oil asset hangs by a thread.
Will Gold Reserve Succeed?
The leading bidder is Gold Reserve, offering $7.38 billion, backed by a consortium that includes Koch Industries and Siemens Energy. Their proposal features a “waterfall” payment structure, prioritizing creditors with judgments over any entity sanctioned by OFAC (U.S. Office of Foreign Assets Control).
However, the path is not clear. Two key factors threaten the success of this bid:
Formal OFAC Approval: Although Gold Reserve received informal approval, definitive authorization is still lacking. The Treasury must ensure that the funds do not reach PDVSA or sanctioned actors.
Legal Objections: Creditors like ConocoPhillips, with a claim of $12 billion, may contest the terms, arguing that compensation is insufficient.
If the Delaware court does not approve the bid, the “stalking horse” offer from Red Tree Investments, for only $3.7 billion, will come into play, severely limiting creditor recovery.
Geopolitical Risk: Maduro Denounces, U.S. Pressures
The regime of Nicolás Maduro has labeled the auction illegal, yet U.S. sanctions limit its ability to intervene. Meanwhile, the Venezuelan opposition—controlling the CITGO board—defends the sale as a tool for pressure against the dictatorship and a way to settle debts without benefiting the regime.
However, the risks are multiple:
Fiscal collapse would intensify if Venezuela loses its largest external asset.
The U.S. backing for the auction could become unstable if the legal battle drags on or if OFAC delays its decision.
CITGO is rapidly losing operational value: its net income plummeted from $2 billion in 2023 to just $305 million in 2024.
The United States aims to exert maximum pressure on the Maduro regime and financially suffocate it.
What Can Creditors Expect?
Even if the auction goes through, the recovery outlook is bleak:
The estimated value of CITGO is $11–$13 billion, but the auction is expected to yield only $8 billion.
The payment structure prioritizes Koch and Siemens, with $2.7 billion in judgments.
Other creditors, including holders of PDVSA 2020 bonds (8.5%), will likely receive pennies on the dollar.
Investment Strategy: Playing with Fire
According to analysis from The Journal and reports from Bloomberg and Reuters on the CITGO auction, this represents a high-risk speculative opportunity for investors with aggressive profiles. In the case of Gold Reserve (GRZ.V), whose $7.38 billion bid is leading the process, some analysts believe a court approval could boost its shares by 50% to 70%, given the strategic importance of the asset (CITGO operates three refineries and over 6,000 gas stations in the U.S.). However, if the Delaware court or OFAC blocks the transaction, the drop could be around 30% to 40%, indicating high volatility (Reuters, June 2024).
The recommended play by specialized managers would be to take a small speculative position (1–2% of the portfolio) with a technical stop-loss below recent lows, awaiting the scheduled ruling for August 18, 2025, a crucial date that will shape the future of the operation (The Journal, May 2024).
As for PDVSA-CITGO linked bonds, particularly the PDVSA 2020 at 8.5%, the consensus among sources like LatinFinance and Financial Times is that their value depends almost exclusively on the court outcome and a potential explicit authorization from OFAC. The general warning is clear: unless the investor is willing to take a loss of 70% or 80%, the most prudent course is to stay out.
Finally, for most analysts consulted, the best strategy right now is to wait. The Delaware ruling will be decisive in clarifying regulatory risks, recovery levels, and potential future challenges. Until then, any movement may be more speculation than grounded investment (Bloomberg Intelligence, July 2024).
What’s at Stake?
The outcome of the auction will determine whether creditors recover at least a fraction of what is owed or if the legal tangle continues to grow.
The court ruling will also set precedents on how to handle foreign assets of sanctioned regimes.
The pressure on the Biden administration to maintain sanctions coherence without collapsing CITGO’s operation could redraw the energy and diplomatic map of the U.S. in Latin America.