Citgo Files Suit in Texas to Stop Third-Party Vendor From Auctioning 'Stranded' Goods

Citgo Petroleum filed a lawsuit in the U.S. District Court for the Southern District of Texas, seeking to stop international trading company Teknik Trading from auctioning off its goods that are “stranded” because Citgo's parent company is subject to U.S. sanctions. According to a June 25 complaint, Citgo contracted Teknik to store then deliver over $11 million worth of goods intended for Citgo's parent company, Petroleos de Venezuela S.A. (PdVSA). Once PdVSA was sanctioned by the Treasury Department's Office of Foreign Assets Control, the goods were frozen (Citgo Petroleum Corporation v. Teknik Trading Inc., S.D. Tex #4:21-02086).

Teknik subsequently stored the goods in two warehouses in Houston and Miami. One part of Citgo's lawsuit involves what exactly the oil company owes Teknik under their existing agreement. The other part seeks to enjoin Teknik from auctioning off the goods -- an outcome that is currently being prevented via a temporary agreement between the parties. Teknik says it plans to auction off the goods to offset the amount it is owed by Citgo, the complaint said.

Citgo wants the court to find that it owes Teknik nothing due to existing contract violations or, should the court find no contract violation, to declare the exact amount owed to Teknik and halt any auctioning of the goods. Teknik has violated the agreement by not allowing Citgo to inspect the goods currently in storage, Citgo said.