U.S. Ready To Stop Russian State Deal With Venezuela For Texas Oil Firm: Report

Drivers wait for service at a Citgo gas station in Kearny, New Jersey, on September 24, 2014. Eduardo Munoz/Reuters

President Donald Trump's administration is ready to stop a potential Russian state takeover of some petroleum assets in the U.S., as the current cash-strapped holders could offload them to Moscow in a controversial deal, The Wall Street Journal reported on Friday.

U.S. lawmakers demanded earlier this year that the White House and the U.S. Treasury keep a close eye on the situation, which could see Venezuela's Petróleos de Venezuela SA hand over its stake in a Texas company—with around 5 percent of U.S. crude-oil refining capacity—to Moscow.

Venezuela has offered Russia's state-run giant Rosneft nearly half the shares in U.S.-based Citgo Petroleum Corp as collateral for the $1.5 billion Rosneft loaned Venezuela in 2016 as the country's current crisis was beginning.

"We cannot give [Russian President Vladimir] Putin any opening to affect the flow of oil or toy with Americans' prices at the pump," Democratic Senator Bob Menendez said in April. "And we cannot play Russian roulette with America's energy infrastructure. The risk to our national security and our economy is not one I'm willing to take."

Lawmakers from both parties have since joined the call against the prospective deal.

Trump has faced persistent allegations that he and some of his associates are too close to the Kremlin, but on Venezuela, the administration has retained a tough line. Last month, Trump signed an executive order banning trade in Venezuelan debt or the sale of bonds from its state oil company. Washington has thus barred Citgo from sending profits back to Venezuela.

Should Rosneft attempt to take the Citgo shares as collateral, the White House has the authority to deem it a violation of national security and stop it, senior U.S. officials told The Wall Street Journal on the condition of anonymity.

"Should Rosneft assume a majority stake, that could trigger a number of legal implications for Citgo in terms of their status," one senior administration official said. "Moreover, that would constitute a change in foreign ownership of Citgo, and we would look at that accordingly."

Rosneft has been blacklisted in the U.S. since Washington sanctioned a number of Kremlin enterprises over Russia's annexation of Crimea from Ukraine in 2014, the official noted.

According to a second senior administration official, the Treasury could spoil such a deal under the existing sanctions were Moscow to prove "foolish enough to go down that path" and attempt the switch.

A third senior U.S. official pledged the Treasury's commitment to "the national security of the U.S." and assured that, the sanctions aside, a review by the Committee on Foreign Investment in the United States would put the kibosh on any such deal that threatens the U.S. politically.

The Rosneft press office did not respond to a request for comment.