The court order raises the likelihood that Venezuela’s state-run oil company, Caracas-based Petroleos de Venezuela SA (PDVSA), will lose control of the valuable external asset amid the country’s deepening economic and political crisis, said the report. The United States has already imposed sanctions against Venezuela and PDVSA over civil-rights abuses.

Through CITGO and its three refineries, the Venezuelan government is the largest foreign owner of U.S. domestic refinery capacity. The refineries account for about 4% of domestic fuel capacity and are major suppliers of gasoline, diesel and jet fuel through a network of pipelines and terminals across 24 states. Independent CITGO-branded retail marketers sell motor fuels through about 6,000 gas stations and convenience stores in 30 U.S. states.CITGO did not respond to a CSP Daily News request for comment by posting time.

Toronto-based Crystallex International Corp., a defunct Canadian gold mining company that filed the legal action, is trying to collect on a judgment over lost mining rights involving Venezuela’s government. It has targeted Houston-based CITGO because it is Venezuela’s largest U.S. asset. It is the first to win a judgment authorizing its seizure, said the report.

Crystallex “alleges that Venezuela, aware of the possibility of a large award against it in a World Bank arbitration, orchestrated a scheme to monetize its American assets and pull the proceeds out of the United States in order to evade potential arbitration creditors,” Judge Leonard P. Stark of the U.S. District Court in Wilmington, Del., said in an opinion on the case in 2016.

“[The] plaintiff contends that Petroleos, a state-owned Venezuelan company, is an alter ego of the Venezuelan government,” the court document said. "Plaintiff alleges that Venezuela and Petroleos caused CITGO Holding to issue $2.8 billion in debt, the proceeds from which were later paid to its parent company, PDVH, as a dividend. PDVH then transferred this sum further up the ladder and out of the U.S. by issuing a dividend in the same amount to its own parent, Petroleos. In [the] plaintiff's view, this series of events was carried out in order to repatriate funds to Venezuela, where they would be 'safe from execution by creditors.' "

For Venezuela, losing control of CITGO could jeopardize one of its only remaining sources of oil revenue—the United States, the Journal said. Investors in Venezuela’s defaulted debt, as well at least 43 companies pursuing legal claims against the government, risk losing one of the few obvious assets in the United States that can be seized for repayment, said the report.

Stark issued the ruling Aug. 9; however, his full opinion, which could include conditions or impose further legal hurdles, was sealed. A redacted version is expected to be available at a later date. The decision could still be appealed to a higher court. Any sale of CITGO stock would require U.S. Treasury Department approval, and Crystallex needs to clear other legal hurdles before the shares could be sold, said the report.