*

Judge approves a $5.9 billion bid from an affiliate of

Elliott

Investment Management for control of Venezuela-owned Citgo

Petroleum

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Citgo is the seventh-largest refiner in the US

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The transaction still needs approval from the Office of

Foreign

Assets Control and other regulators

(Adds details and background throughout)

By Marianna Parraga

HOUSTON, Nov 25 (Reuters) - A U.S. judge on Tuesday

approved a $5.9 billion bid from an affiliate of Elliott

Investment Management in the court-organized auction of Citgo

Petroleum's parent, clearing the way to order the sale of

Venezuela-owned PDV Holding.

Judge Leonard Stark, from Delaware, overruled pending

objections to the bid and set a Friday deadline for a report

with any other material issues that could have been overlooked.

He asked a court officer overseeing the process to submit a

proposed sale order in sufficient time to be signed by Monday,

for which parties including Venezuela must reach an agreement on

terms.

"The Amber Bid offers the best overall combination of price

and certainty of closing of any bid submitted," Stark wrote,

characterizing the process as fair and equitable.

The decision confirms a shift from a recommendation made in

August by court officer Robert Pincus, following a bidding war

in the competition's last mile that saw new and improved offers

for control of Citgo, the seventh-largest U.S. refiner.

The main attraction of the bid from Elliott's Amber Energy is

that it offers a $2.1 billion payment to the holders of a

defaulted Venezuelan bond collateralized with Citgo equity,

which is expected to remove a key obstacle to taking ownership

of Citgo's assets.

A total of 15 creditors have been fighting in an eight-year case

to recover nearly $19 billion in U.S. courts after Venezuela

expropriated assets and defaulted on debt. Evercore, a firm

advising the court, valued Citgo at about $13 billion as part of

the auction, but Venezuela has argued it is worth more than $18

billion.

Stark previously denied motions by the Venezuelan parties

and Gold Reserve to disqualify him, the court officer overseeing

the process and two firms advising the court over an alleged

conflict of interest.

The transaction still needs approval from the Office of Foreign

Assets Control and other regulators. It was not immediately

clear if a deadline was set for receiving replies from those

authorities.

"If OFAC grants a license to Amber Energy, and if this Court's

judgment is not reversed on appeal, many of the

judgment-creditors who have spent years and millions of dollars

trying to recover on billions of dollars of judgments, to

compensate them for harm inflicted by one or more of the

Venezuela Parties years or decades ago, will finally obtain

relief," Stark wrote.

Gold Reserve and creditors Siemens Energy, Consorcio

Andino, Valores Mundiales, Gramercy Distressed Opportunity Fund

and G&A Strategic Investments tried to disqualify Amber's bid,

saying that Pincus' determination that its price was superior

discarded the bidding procedures. Their motion was denied in

September.

The selection of Amber's offer means those creditors will

recover hardly anything from the claims they won against

Venezuela for debt defaults and asset expropriations, according

to a priority list set by the court for distributing the auction

proceeds. But large creditors including ConocoPhillips ( COP )

and miners Crystallex and Rusoro are set to recover billions

from proceeds.

PURSUING A REFINER

In a case first introduced by miner Crystallex in 2017

against Venezuela, Citgo's parent PDV Holding was found liable

for the country's debt. The Delaware court has since attempted

to secure a deal to satisfy the creditors.

In a spiced-up competition, some bidders focused on

maximizing proceeds for the 15 creditors in Delaware, while

others preferred to reduce litigation by negotiating a payment

to the PDVSA bondholders.

A New York judge in September confirmed the validity of the

defaulted bonds, supporting the holders' claim and boosting

Amber's bid. Lawyers representing Venezuela immediately filed an

appeal.

Amber Energy won a first bidding round last year, but its

conditional $7.3 billion offer was rejected by most creditors,

creating the need for new rounds this year and a fresh set of

rules to encourage competition in the complex auction.

Houston-based refiner Citgo Petroleum, the crown jewel of

Venezuela's overseas assets, severed ties with PDVSA in 2019

following U.S. sanctions. Both Venezuelan President Nicolas

Maduro's government and his political opposition have rejected

the auction.