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Senators Warn Mnuchin of National Security Implications of Russia CITGO Takeover

Sebastian Gorka, deputy assistant to President Trump, is interviewd outside of the West Wing on June 9, 2017. (Cheriss May/Sipa via AP Images)

WASHINGTON — Senators are alarmed about the national security implications of Russia acquiring a significant ownership share in an oil company whose terminals span 20 states across the nation.

In a letter to Treasury Secretary Steve Mnuchin, who is chairman of the inter-agency Committee on Foreign Investment in the United States, Sens. Bob Menendez (D-N.J.), Marco Rubio (R-Fla.), John Cornyn (R-Texas), Dick Durbin (D-Ill.), Bill Cassidy (R-La.) and Ted Cruz (R-Texas) say he needs to be prepared to protect U.S. energy infrastructure should Rosneft carry through with seizing control of CITGO Petroleum Corporation’s Venezuelan parent company, state-owned Petroleos de Venezuela S.A.

Oil giant Rosneft is owned by the Russian government and its chairman, Igor Sechin, is a former deputy prime minister under President Vladimir Putin and a close ally. Both the company and Sechin are currently covered under U.S. sanctions.

Amid economic turmoil in Venezuela and the stress of low oil prices, in December PDVSA leveraged 49.9 of its shares in CITGO as collateral for a $1.5 billion loan from Rosneft. With the situation in Venezuela further deteriorating, making default more likely.

The senators wrote that the “series of international transactions” could “have significant national security implications for critical energy infrastructure in the United States.” CITGO has three refineries in Texas, Louisiana and Illinois, several pipelines, and 48 terminals in 20 states.

“A number of respected international market analysts predict that due to the ongoing economic crisis in Venezuela, PdVSA could default on its debt in the very near future. In the case of default, Rosneft would then acquire at least a 49.9 ownership share in PdVSA and its subsidiary CITGO. This could leave Rosneft, a Russian company controlled by oligarchs with close ties to Vladimir Putin, in control of critical energy infrastructure in the United States,” the letter continues.

“Over the course of the last year, Russia has escalated its attacks on the United States in various ways including cyber campaigns intended to sow distrust of our democratic institutions and violating arms control agreements,” the senators added. “Russia has also expressed strong opposition to existing sanctions. As such, we are extremely concerned that Rosneft’s control of a major U.S. energy supplier could pose a grave threat to American energy security, impact the flow and price of gasoline for American consumers, and expose critical U.S. infrastructure to national security threats.”

The lawmakers asked Mnuchin to “proactively monitor the situation” and keep the Senate “briefed on your efforts and any informal review process of Rosneft’s potential acquisition of CITGO.”

“We understand that formal actions are initiated by a formal notification by the parties to a merger, acquisition, or takeover, but we believe that you should be prepared for this eventuality in the case of an acquisition by default,” they wrote. “In the event Rosneft were to acquire CITGO, we would expect a thorough, conflict-free, and expedient review.”

The senators asked for a response from the Treasury secretary by April 28.