MICHEL MARTIN, HOST:
A billionaire investor and Trump donor is poised to benefit following the capture of Venezuelan President Nicolas Maduro. Benoit Morenne is a reporter for The Wall Street Journal who's been covering the oil industry, and he's with us now to tell us more about this. Good morning.
BENOIT MORENNE: Good morning.
MARTIN: So who is Paul Singer and what is his connection to Venezuelan oil?
MORENNE: Right. So Paul Singer is the founder/president/co-CEO of Elliott Management, which is an activist hedge fund. It's an hedge fund that Singer started in the late '70s, and in the years since it has built a massive fortune that Forbes pegs at $6.7 billion or so. So he's been very successful.
MARTIN: And how is he set to gain from the removal of Maduro? I mean, his connection to Venezuelan oil - and how is he set to gain?
MORENNE: Yes. So Elliott Management is set to get its hands on Citgo, which is one of the crown jewels of Venezuelan oil empire. It's a U.S.-based network system, which is key. It's three refineries, terminals and a few other assets. And the expectation with the removal of Maduro is that you would have, eventually, more Venezuelan production of oil.
That's something that Trump is very keen on. He's asking oil and gas companies in the U.S. to invest billions of dollars. So analysts expect that you will see a windfall of Venezuelan crude eventually make its way to refineries on the Gulf Coast. That's precisely what Citgo refineries are configured to process, and that would result in a cheaper feedstock profits and a more valuable company, eventually.
MARTIN: I take it it was considered a risk for Singer to purchase that company that's been heavily affected by U.S. sanctions against Venezuela. In a way, it was kind of a bet.
MORENNE: It was absolutely a bet. That's exactly what Elliott does. That's exactly what Singer does. And that's what they've done very successfully. But yes, you know, Venezuela is not an easy jurisdiction to operate in by any means. There was always a lot of legal uncertainty related to the presence of Maduro.
Maduro was very opposed to the sale, not that he could do a lot of it 'cause a judge decided that, you know, it was fair game to go after Citgo and it was set up in a way that creditors actually could lay claims to it. But it was always going to be risky. And Maduro's departure, that certainly seems to make for a more favorable landscape for Elliott.
MARTIN: Why is Citgo in a better position to gain from the U.S. taking control of Venezuelan oil than other U.S. oil companies?
MORENNE: Well, I would say that it's equally poised to gain from it, you know, relative to other refiners 'cause it's not the only refiner operating in the U.S. You know, companies like Valero, for instance, would also benefit. But Citgo, specifically, had a link to Venezuelan oil, and its two refineries on the Gulf Coast are set up to process that heavy crude oil, right?
And so those refineries are always looking for, as one analyst put it to me, the nastiest, cheapest feedstock. And that certainly fits the bill with Venezuelan oil.
MARTIN: So the sale of Citgo to Singer's hedge fund still has to be approved by the U.S. Treasury. Is this considered likely?
MORENNE: So that's a great question. That's the, you know, million-dollar question for Elliott. They need approval from Treasury's OFAC, which is the office that looks at assets that are under sanctions. And so that's going to be the key regulatory hurdle for Elliott. And then it needs for an appeal made by Venezuelan parties to fail in the courts as well. And so that's ongoing.
And, you know, my sources close to the situation said that the appeal could be resolved in the first half of this year and then - that if Treasury then approves the deal, it could close shortly after that. But there's just so much uncertainty right now, and so there's not a clear timeline.
MARTIN: And I mentioned that Singer is a Trump donor. Any other connections?
MORENNE: Well, Trump - Paul Singer is a influential GOP donor. That is true. He's not always been supportive of Trump. Out of the 2016 election, he actually helped fund a conservative publication that hired a firm called Fusion GPS to conduct opposition research on Trump. But since then, he cemented their relationship, and federal filings show that he gave some $8 million to various political action committees to help Trump get elected in 2024. So it certainly has this connection to Donald Trump.
MARTIN: So a lot to talk about here. Also, really curious going forward how the rest of the industry is going to react to all this. So we'll have to talk about that in the future. That's Wall Street Journal reporter Benoit Morenne, who covers the oil industry. Benoit, thanks so much for talking to us.
MORENNE: Thank you for having me. Transcript provided by NPR, Copyright NPR.
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