The US financial authorities are concerned about Russia's growing ability to influence the US energy sector. Rosneft is the creditor of the Venezuelan oil company Petróleos de Venezuela (PdVSA), and a large stake in Citgo, the American subsidiary of PdVSA, is providing collateral for the loan. If the state company defaults on obligations, which, according to officials and analysts, is very likely, Rosneft can gain control of Citgo, which owns significant energy assets in the US - three refineries, nine pipelines and 48 terminals for storage of petroleum products and a network of gas stations.
The prospect that a significant part of the US energy infrastructure will fall under the control of the Russian state company, worried both the heads of the US Treasury Department and the State Department, as well as congressmen, officials and administration say. "I know about this problem. And I can assure you that this issue will be thoroughly studied, like any other one concerning national security, "US Treasury Secretary Stephen Mnuchin said at the parliamentary hearings on Thursday.
Rosneft, which has been sanctioned by the US since 2014, has become the object of attention for the second time by the administration of Donald Trump. In April, Trump personally opposed the decision to allow ExxonMobil to resume cooperation with Rosneft in the Black Sea. However, congressmen on Thursday said that they intend to carefully check everything that concerns the president and Russia, since the investigation of contacts of members of his campaign headquarters with Moscow during the election campaign raises more and more questions.
"When I asked Minister [Mnuchin] at the meeting of the banking committee, I was glad to hear that the Ministry of Finance considers the possibility of Citgo's acquisition of Rosneft as a serious threat to national security. I expect that the minister will adhere to this point of view in the event of a PdVSA default and will carefully study all the consequences for the safety of our energy infrastructure and national security, "Senator Robert Menendez said.
Democrat congressmen were also asked questions by the fact that Citgo this year allocated about $ 500,000 to Trump's inauguration. This happened in the midst of the economic crisis in Venezuela, which forced PdVSA to apply for financing to Rosneft and other creditors. Citgo representative Fernando Garay said that he is studying this issue and can not comment on it promptly.
In the event of default PdVSA, many American companies whose enterprises have been nationalized in this country can claim Venezuelan assets. Therefore, the battle for Citgo can last for years.
Nevertheless, the administration officials in recent months are actively discussing possible actions in case Rosneft gets control of Citgo. This is demanded also by congressmen.
Igor Sechin, chief executive officer of Rosneft, told reporters in Berlin on Thursday that 49.9% of Citgo's shares are collateral for PdVSA loans at $ 1.5 billion, and added that Rosneft is not going to directly manage any of Citgo's assets USA. "We do not want to manage this network and do not intend to do this," he said. Rosneft did not provide comments for this article.
If Rosneft tries to gain control of Citgo, this could be a serious problem for the White House, former and current officials agree. If this happens, the Ministry of Finance will technically be forced to extend the sanctions regime to Citgo as well, they explain. But the volume of Citgo operations in the US is so large that the Treasury will have to issue special permits to ensure the smooth operation of the company.
Mnuchin said on Thursday that the Committee on Foreign Investments (CFIUS) will have to consider the situation around Citgo. The CFIUS has the authority to block the acquisition of US assets by foreigners in the interests of national security. Nevertheless, the possibility of CFIUS to oppose the receipt of control over Citgo by the Russian state-owned company is questionable, officials say. The right of Rosneft to demand a stake in Citgo is connected with the debt obligations of the parent company PdVSA and originated outside the financial system of the United States. The only deal that took place in the US - the acquisition of Citgo by a Venezuelan company in the 1980s.
"This is a non-obvious situation, according to which CFIUS could make a decision," says attorney Eric Lorber from the Foundation for Defense of Democracies. He, like many current and former officials, sees the situation with Citgo as another example of Moscow's use of the energy sector as a weapon in foreign policy. Russia regularly denies such accusations.