HOUSTON/MIAMI (Reuters) – A U.S. auction of shares that could determine the destiny of Citgo Petroleum, owned by Venezuela, saw disappointing bids, pushing Venezuela to explore alternative payment strategies.

Citgo, a Houston-based oil refiner, faced a pivotal moment as the auction failed to attract bids sufficient to meet court-approved claims. The highest bid of $7.3 billion covered only a third of the $21.3 billion in claims, indicating a challenging path ahead.

The court may need to reassess the auction process or consider Venezuela’s proposal, which suggests a larger payout spread over several years, potentially allowing Venezuela to retain partial ownership.

Despite Judge Leonard Stark’s initial reluctance, the underwhelming bids and concerns over unpaid claims might prompt reconsideration.

Citgo’s profitability, with earnings of $4.8 billion in the past two years, makes it an attractive asset. However, potential buyers are wary of its carbon footprint and ties to Venezuela’s state oil firm, PDVSA.

Venezuela’s proposal aims to provide creditors with a $10 billion payout over three years, allowing Venezuela to retain half of Citgo’s ownership. The proposal also seeks stronger U.S. protection for Citgo amid political tensions in Venezuela.

The plan faces hurdles, including gaining support from U.S. officials and unifying Venezuela’s opposition, crucial for winning U.S. backing.

Despite challenges, stakeholders remain hopeful for a viable resolution to safeguard Citgo’s future.

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