Amid the hectic process of the CITGO auction, Horacio Medina, president of the Ad Hoc Administrative Board of PDVSA, assured that the funds from the Venezuelan refinery in the United States were not used to finance the so-called interim government led by Juan Guaidó.
Medina told Sion Filtros and Venezuela Política that the funds from CITGO Petroleum Corporation operations are closely monitored, both by the Office of Foreign Assets Control (OFAC) of the Department of the Treasury and by the Delaware Court overseeing the sale process of PDV Holding Inc.’s shares.
This conversation offers an analysis of CITGO’s complex legal and financial situation, the PDVSA subsidiary in the United States, and its imminent forced auction to pay multiple creditors of the Venezuelan state. The process, which has intensified since 2017 and especially since 2019, has reached a critical phase with a bid hearing scheduled for August 18.
The CITGO Auction: A Forced Process
Horacio Medina noted that since he assumed the ad hoc presidency of Petróleos de Venezuela (PDVSA), formed to preserve Venezuelan oil assets abroad, his activities have mainly focused on saving CITGO if the anticipated democratic transition occurred.
This did not happen, and with Crystallex’s lawsuit ongoing, as well as the holders of PDVSA 2020 Bonds, regarding which 50.1% of PDVH’s shares were considered as collateral — an unconstitutional and illegal act — it led to the payment, under protest, of bond interests, buying time to design a defense strategy for this important Venezuelan asset.
Medina pointed out that Venezuelan law and the Constitution, by placing PDVH’s shares as collateral for the bonds, is a point that the Appeals Court ordered to be reassessed in the District Court.
Then, a special OFAC license was issued to protect PDV Holding and CITGO from the embargo of 50.1% of PDVH’s shares, which would have allowed bondholders to take control of the Venezuelan refinery.
He recalled that initially Venezuela lost the case, with the defense arguments regarding the illegality and unconstitutionality of having sold the bonds with the guarantee of PDVH shares, owner of CITGO, being rejected. The appeal of the case and its presentation in higher courts led to a decision to restart the judicial process in the District Court, this time allowing Venezuela to argue its unconstitutionality. This is currently underway.
The CITGO auction is the result of multiple class action lawsuits and judicial decisions in the United States, particularly from Judge Leonard Stark, head of the District Court for the District of Delaware, which is handling the case.
Medina insists that this CITGO auction is not a voluntary sale by the current administration. “We are not selling; we are opposed to this process, but I repeat, it is something dictated by the federal judge, and we have the obligation to comply.”
Creditors and Expansion of the List
Horacio Medina argues that the ad hoc board of PDVSA has exhausted all possible judicial avenues.
Horacio Medina clarifies that the pandemic and other internal circumstances of CITGO led to a process of recovery starting in 2021 and the possibility of negotiating with the few claimants at that time. However, this negotiation did not materialize.
In 2023, the Treasury Department relaxed the license protecting CITGO from embargo, unleashing a series of legal actions regarding the alter ego theory, which plaintiffs extended to the ad hoc board of PDVSA, using press notes claiming that USD 1 billion was given to the interim government.
Medina denied this last claim and asserted that it was an impossible scenario due to OFAC’s supervision.
The list of aspirants to receive funds from the CITGO auction significantly expanded. Initially, the major litigants were Crystallex, the 2020 bonds, and ConocoPhillips, but the mentioned relaxation of the OFAC license allowed more companies to join the process. As of January 2024, the list closed with 18 creditors, in addition to the 2020 bonds in New York.
This halted direct negotiations with CITGO, as creditors believed they could resolve the case more quickly through judicial means.
Current Bids and Complications
Horacio Medina maintains that the ad hoc board of PDVSA has exhausted all possible judicial avenues, including appeals to the Superior Court and the Supreme Court — even though certiorari was denied in 2023 — with plans for new appeals after the August 18 hearing.
He estimates that the process could extend into the first quarter of 2026. Even after a firm ruling, a license from OFAC will be required for any transaction, which “also obeys elements of a political nature concerning state policy and U.S. security,” warns Medina.
He noted that the primary offer comes from Gold Reserve, but an “unsolicited offer” emerged without further details, which could complicate the process.
Defense of CITGO: Strategies and Challenges
The president of the ad hoc board of PDVSA explains that defending CITGO has been a challenging and multifaceted process, leading to multiple legal and political obstacles.
Medina reiterates that since February 2019, the main objective has been to “safeguard CITGO and PDVSA’s assets abroad and other assets of the Republic,” but the alter ego theory—asserting that PDVSA is the “other self” of the Republic of Venezuela—holds the company liable for the state’s debts.
Horacio Medina highlights the controversy surrounding the position of the interim’s former prosecutor, José Ignacio Hernández, who had expressed an opinion on this theory before his tenure. Judge Stark’s decision to rule on the alter ego, even during the interim government, based on already cited press notes regarding alleged payments to the government, is deemed incorrect and not in line with due process by Medina.
Likewise, Horacio Medina mentioned that attempts to claim irregularities in the CIADI awards—particularly concerning Crystallex—were rejected. The tribunal’s argument was that Venezuela could not “plead our own negligence for the defense,” as it had not been adequately represented by Nicolás Maduro’s government at the time.
The Third Circuit Court also broadened the range of cases to consider — including claims from 2003-2004 — which “opened the floodgates for many other companies.” This decision is seen as contradictory, as it was made “on a government [Maduro] not recognized by the United States to penalize a company [CITGO] recognized by the United States.”
He reported that intense lobbying and diplomatic efforts have been ongoing in Washington for 18 months to explain CITGO’s importance for a democratic transition in Venezuela, an activity that required OFAC authorization.
Financial Situation of CITGO and Money Management
On another note, Horacio Medina mentioned CITGO’s remarkable financial recovery generating significant profits, which have mainly been used to pay CITGO’s direct creditors — USD 4 billion have already been paid — leaving only USD 1 billion due next year.
Medina insists that CITGO’s funds are strictly monitored and cannot be used for other purposes. “All the money CITGO can use is the funds allocated for operational maintenance, optimizing plant investments… this is closely monitored by OFAC.”
Additionally, there is oversight from the Department of Justice through Judge Stark, and creditors exercise “close surveillance.”
Regarding the Simón Bolívar Foundation funded by CITGO, Medina stated that both its budget and strict controls over fund usage were increased, especially after detecting “misuse” in some cases of aid to NGOs in Venezuela.
He specified that a debt renegotiation of CITGO and a request for money to increase operational cash flow — from USD 300 million to USD 1.5 billion- USD 2 billion — allowed the company to better face the pandemic and other challenges. Currently, the operational cash flow is around USD 1.7 billion to USD 1.8 billion, while the remaining debt of USD 1 billion is manageable.
Accusations and Transparency
Horacio Medina addressed allegations of corruption and lack of transparency in the management of CITGO by the ad hoc board. He acknowledged the historical corruption in PDVSA and CITGO — Bariven, PDV Services — but asserted that under the current administration, significant measures have been taken:
- Retirement or resignation of key decision-making personnel,
- Drastic reduction of purchases from traders (from 18% to 3%),
- A rigorous supplier registration process with external audits and bidding committees, under the supervision of a compliance vice presidency.
He also clarified the expenditure of USD 850,000 on a documentary and a communications/lobbying campaign. He justified this as part of a strategy to inform and defend CITGO in Washington, given the lack of media coverage in Venezuela. The spending is comparable to investments made by other major companies in lobbying. Expense reports are publicly registered in FARA.
He acknowledged the plight of dismissed PDVSA workers and the existence of an ILO ruling in their favor and a draft law in the National Assembly from 2016. However, he mentioned that the ad hoc board of PDVSA has not been legally notified of these claims, and the process to add creditors to the auction case was closed in January 2024. “They arrived too late, did not comply with the regulations, did not follow the rules.”
Strategic Importance of CITGO for Venezuela
Finally, Horacio Medina emphasized that the potential loss of CITGO would be a devastating blow to Venezuela’s future, especially regarding a possible democratic transition.
He believes CITGO would serve as an “important pillar” during the early years of a democratic transition, crucial to stabilizing the energy market and ensuring immediate cash flow.
He reported that there is a “tactical emergency plan” with ad hoc PDVSA for the first 100 days, the first year, and the second year of a possible transition. This plan includes sending gasoline, diesel, fuel oil, and jet fuel to Venezuela, as well as receiving crude oil from PDVSA for CITGO’s refineries in the United States.
He noted that CITGO developed a trading capability inside and outside the United States to market Venezuelan crude, adding that while PDVSA is seen as “unrepeatable” and “irrecoverable” in its current state, the refinery could play an important role in recovering the Venezuelan oil company.