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UPDATE 1-U.S. senators seek review of potential Russian control of Citgo
September 19, 2017 / 8:10 PM / 3 months ago

UPDATE 1-U.S. senators seek review of potential Russian control of Citgo

(Adds Treasury saying it cannot disclose information filed with CFIUS, paragraph 6)

By Timothy Gardner

WASHINGTON, Sept 19 (Reuters) - Two U.S. senators have urged the Trump administration to clarify if it is reviewing the potential acquisition by Russian oil company Rosneft of Venezuela’s state oil company PDVSA and U.S. subsidiary Citgo, saying a shift in Citgo’s assets would be a security risk.

Democrat Bob Menendez and Republican Marco Rubio asked whether the Committee on Foreign Investment in the United States, or CFIUS, is looking into if the political crisis in Venezuela could lead to a change in the control of its oil assets, according to a letter sent to Treasury Secretary Steven Mnuchin dated Sept. 18, seen by Reuters.

“Given Venezuela’s increasingly dire economic and humanitarian situation, we are seriously concerned with a possible acquisition by Rosneft of PDVSA and Citgo,” the letter said.

Mnuchin chairs CFIUS, made up of members of the Cabinet of President Donald Trump, which reviews potential national security aspects of foreign investments in U.S. companies. The additional political pressure from CFIUS reviews have occasionally helped break plans by foreign companies to acquire U.S. companies in the past.

Last week, Trump blocked a Chinese-backed private equity firm from buying U.S.-based chipmaker Lattice, citing security risks.

A Treasury Department spokesman said the department is prohibited by law from commenting on the disclosure of information filed with CFIUS to the public.

Menendez has said the potential takeover of U.S. energy infrastructure by Rosneft, majority owned by the Russian government, raises economic and security concerns. Citgo has a 749,000 barrel per day refining network in the United States and other assets.

At least 125 people have been killed in four months in protests against the Venezuelan Socialist government of President Nicolás Maduro, which has resisted calls to bring forward the presidential election. The government has set up a pro-Maduro legislative superbody called a Constituent Assembly that has overruled the country’s opposition-led Congress.

As Maduro’s government has turned to its Russian ally for credit and cash, it has offered some of the oil assets held by Petroleos de Venezuela (PDVSA) in return, raising fears that Rosneft could also control Citgo assets..

During a U.S. congressional hearing in May, Mnuchin said Rosneft’s potential acquisition would be reviewed by CFIUS. And in a phone call in July for congressional staffers on sanctions against Venezuela, an administration official said a CFIUS review was underway, the letter said.

Trump on Monday warned that Washington might take additional measures to apply pressure on Venezuela, which provides 10 percent of the oil the United States consumes. He has already imposed financial sanctions and said military intervention could be an option. (Reporting by Timothy Gardner, Editing by Rosalba O‘Brien)

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