HOUSTON (Reuters) - Lawsuits by three firms seeking to improve their chances of obtaining proceeds in an auction of shares in Citgo Petroleum's parent can go ahead, a U.S. judge ruled in an order issued on Monday.

The decision could reduce the proceeds of any sale, the court officer overseeing the auction in federal court in Delaware had said in a motion seeking to block the parallel lawsuits. Shares in Citgo parent PDV Holding are being auctioned to repay $21 billion in claims for debt defaults and expropriations by Venezuela and state oil firm PDVSA.

PDV is a U.S. subsidiary of PDVSA and is the indirect sole stockholder of Citgo.

The three related firms - Gramercy Distressed Opportunity Fund, G&A Strategic and Girard Street Investments - brought parallel lawsuits in other courts after their claims left them unlikely to fully recoup claims in the Delaware court auction.

Gramercy declined to comment.

The court officer overseeing the auction had asked the judge to bar their Texas and New York claims, saying they could reduce bids. He had recommended bids by Elliott Investment Management affiliate Amber Energy that were contingent on an injunction being issued.

Elliott had threatened to quit the auction if the injunction was not issued. A spokesperson declined immediate comment.

U.S. District Judge Leonard Stark, who called rejecting the injunction his "least bad option," firmly opposed the Special Master's motion to enjoin. The special master is a court officer overseeing the auction.

The proposed motion lacks a legal basis, and evidence of new bids being prepared show the claims by Gramercy and others "are not nearly as big of a problem as the Injunction Motion portrays them," Stark wrote.

The share auction was "never intended" to be free of a risk others might try to seize Venezuela assets. "The fundamental premise of the Special Master's Motion, that an injunction is necessary, is unproven," Stark wrote.