Citgo Petroleum, a U.S. refiner, has purchased Venezuelan crude oil for its first purchase since 2019. This was when Citgo severed its ties with Petroleos de Venezuela (its parent company), two sources said on Wednesday.

The 830,000-barrel-per-day refiner, which is expected to be taken over by an affiliate of hedge fund Elliott Investment Management to pay Venezuela-linked creditors following a court-ordered auction, has the network in the U.S. that is most fit to process Venezuela's heavy sour oil.

Citgo is 'blocked' from accessing Venezuelan barrels as of 2019. The refiner severed ties with Caracas-headquartered PDVSA months after the re-election of President ?Nicolas Maduro, which the U.S. did not recognize.

Washington and Caracas agreed to a $2 billion deal shortly after Maduro's capture by U.S. troops. The government in Caracas is now led by interim president Delcy Rodriguez. Since then, trading companies have been marketing millions of barrels Venezuelan oil.

Citgo bought a cargo from Trafigura of about 500,000 barrels of Venezuelan heavy oil for delivery in February, according to sources who asked to remain anonymous to discuss confidential information.

Trafigura declined comment. Citgo declined to comment.

The deal is a significant milestone in U.S. attempts to normalize Venezuelan oil and boost its revenue. Washington gained control of Venezuelan oil shortly after Maduro was captured. Citgo is also a key player, as it has in recent years resorted to other Latin American crudes and U.S. domestic oil to fill Venezuela's void.

Citgo, the U.S.'s seventh largest refining company, was purchased by PDVSA back in the 1980s in order to ensure a North American outlet for Venezuelan crude oil. The company was one of the biggest buyers of Venezuelan crude oil until 2019 when U.S. sanctions were imposed on Venezuela's energy sector to put pressure on Maduro.

Citgo was a major supplier of refined products for Venezuela.

Citgo was not allowed to access Venezuelan oil, even after sanctions were lifted partially in recent years. This allowed other U.S. refiners the opportunity to import cargoes via U.S. giant?Chevron.

U.S. officials say they have accelerated the deals signed with Vitol, Trafigura and other trading houses, the first after Maduro was captured, in order to clear the massive oil stockpiles caused by the U.S. blockade that forced the country to reduce its crude production. Reporting by Shariq KHan in New York, Marianna Parra in Houston and Christian Schmollinger.

(source: Reuters)