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The Wall Street Journal: U.S. looking into Russia’s hold on Citgo, and the problems that may cause

May 18, 2017
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U.S. financial authorities are looking into the Russian government’s growing leverage over Citgo Petroleum Corp. amid heightened concern that the Kremlin is seeking to use energy as a political weapon against the U.S., according to U.S. and congressional officials.

Russia’s state-owned oil giant PAO Rosneft in recent months has amassed debt that is backed by a near-controlling stake in Citgo, the Houston-based subsidiary of Venezuela’s Petróleos de Venezuela SA, or PdVSA. In the event of a default of that debt — a prospect seen as increasingly likely by U.S. officials and Wall Street — Rosneft would be in a position to engineer a takeover.

The move has sparked concern inside the Treasury and State departments — as well as on Capitol Hill — that Rosneft could seek to eventually gain control of Citgo’s vast energy assets inside the U.S., which include three oil refineries, nine pipelines and nearly 50 petroleum platforms, these officials said.

The matter also could further drive a wedge between Washington and Moscow as they continue to squabble over sanctions against Russia and diplomatic efforts to broker a peace deal in Syria.

An expanded version of this report appears on WSJ.com.

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