Activist hedge fund Elliott Investment Management is positioning itself for another major restructuring play, this time targeting Citgo Petroleum, as the long-running court-ordered auction of the Venezuela-owned refiner nears its conclusion, according to a report by Reuters.
The report cites unnamed sources familiar with the matter as revealing that Elliott affiliate Amber Energy is proposing a sweeping cost-cutting and operational streamlining plan for Citgo – an approach that contrasts sharply with rival bidder Gold Reserve’s preference for maintaining the status quo.
Amber Energy’s $5.9bn bid is currently favoured by the US court overseeing the sale of Citgo’s parent company, PDV Holding. A key differentiator in Elliott’s offer is its agreement to pay $2.1bn to holders of defaulted Venezuelan bonds, potentially clearing a major legal hurdle that has long complicated ownership of the US-based refiner.
If approved, Elliott’s plan would mark one of the hedge fund’s most ambitious energy-sector turnarounds to date. The firm has recently demonstrated its activist edge at Phillips 66, where it secured board seats and is pushing for divestitures and cost discipline. Sources say Elliott intends a similar playbook at Citgo – removing top executives, overhauling governance, and targeting inefficiencies inherited from its years as a state-owned subsidiary of PDVSA.
Citgo, with refining capacity of 807,000 barrels per day, employs 3,300 people and supplies roughly 4,000 retail outlets across the US. The potential restructuring could precede selective asset sales or trading joint ventures designed to improve margins and sourcing economics.
By contrast, Gold Reserve’s bid – through its unit Dalinar Energy – envisions minimal disruption. The Canada-listed miner aims to retain Citgo’s existing leadership and infrastructure while using the refiner’s cash flow to build a US downstream foothold.
However, court officers and creditors have questioned Dalinar’s financing structure, arguing it relies too heavily on Citgo’s future performance.
A ruling on the winning bidder is expected soon, though any transfer of control will require US Treasury approval due to sanctions linked to Venezuela.
