Citgo Wins $54M from Lloyd’s Insurers After Oil Seized by Venezuela Government

Citgo Petroleum Corp. was awarded an insurance payment of more than $54 million for almost 1 million barrels of crude seized by the Venezuelan government.

A jury in federal court in Manhattan decided late Monday that insurers must pay Citgo for its claims over the lost crude, which it purchased in 2019 from its nominal parent, Petroleos de Venezuela SA, or PDVSA, the national oil company controlled by President Nicolas Maduro.

The case stems from the US government’s decision in 2019 to recognize Venezuelan opposition leader Juan Guaido as the country’s legitimate ruler after a contested election. Guaido was also given the reins of US-based refiner Citgo and its direct corporate parent, though they also remain units of PDVSA.

The oil was being transferred to a tanker when the US announced it was recognizing Guaido and imposed other restrictions on Venezuela and PDVSA. In response, Maduro ordered vessels halted in Venezuelan territorial waters. Armed forces loyal to Maduro eventually commandeered the ship and directed it to a terminal controlled by PDVSA, where the oil was discharged.

Citgo filed a claim with the insurers, a group of Lloyd’s of London syndicates, seeking coverage under a provision of its policy that covers losses from seizures arising from insurrections. But the insurers denied the claim, saying the political turmoil did not amount to an insurrection and that the seizure, in any case, stemmed from Citgo’s failure to pay for the oil.

The court had already ruled that the upheaval surrounding the Venezuelan election constituted an insurrection, but told the jury to determine whether that caused the seizure. Jurors decided that it did.

Lloyd’s didn’t have an immediate comment on the verdict.