August 15, 2017 / 4:35 PM / 2 months ago

Canadian miner Crystallex takes aim at Citgo in Venezuela dispute

CARACAS (Reuters) - Canadian miner Crystallex is seeking to seize shares in a subsidiary of Venezuelan state oil company PDVSA that owns U.S. refiner Citgo as part of a dispute over Venezuela’s 2008 takeover of the Las Cristinas gold mine, according to court filings.

Crystallex is seeking to collect on a $1.4 billion award it won via a World Bank arbitration panel in 2016.

It has been among the most aggressive of some 20 companies pursuing similar disputes regarding nationalizations under Venezuela’s late socialist leader Hugo Chavez.

Crystallex on Monday asked the U.S. District Court in Delaware to attach shares in Delaware-based PDV Holding, a PDVSA subsidiary that owns refining and marketing company Citgo Petroleum. Citgo owns three refineries and a network of terminals and pipelines.

PDVSA rejected Crystallex’s claim. “The attempt to execute an award against (Venezuela) by seizing PDVSA assets is totally inappropriate and the corporation will take all necessary legal action to protect its assets,” it said in a statement.

The struggling state oil firm in 2016 issued a bond that used 50.1 percent of shares in Citgo Holding Inc as collateral, as part of a broader refinancing operation. The remaining 49.9 percent of Citgo shares were used as collateral for a $1.5 billion loan from Russian state-owned oil producer Rosneft (ROSN.MM).

The latter is negotiating to swap that collateral for oilfield stakes and a fuel supply deal, partly in order to avoid complications from U.S. sanctions.

Companies ranging from U.S. oil giant Exxon Mobil Corp (XOM.N) to small Canadian miner Gold Reserve are pursuing claims against Venezuela via the World Bank tribunal known as the International Centre for Settlement of Investment Disputes, or ICSID.

Enforcing those judgments in the United States requires that the ICSID decisions be ratified by U.S. courts, which Crystallex has done.

Crystallex in June won court orders blocking Japan’s Nomura Holdings Inc (8604.T) and China’s Haitong International Securities Group Ltd (0665.HK) from transferring securities owned by Venezuela.

The government of President Nicolas Maduro is struggling under the collapse of Venezuela’s country’s socialist economic model, which is suffering from triple-digit inflation, chronic product shortages and rising incidence of malnutrition.

Maduro insists his government is the victim of an “economic war.”

Reporting by Brian Ellsworth; Editing by Marguerita Choy and Leslie Adler

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