CARACAS, Venezuela - One of Venezuela’s creditors has rescinded a settlement agreement with President Nicolás Maduro’s government and hired bankers to force a sale of Citgo Petroleum Corp., the country’s Houston-based crude refiner, according to the Wall Street Journal.

Crystallex International Corp., a Canadian gold exploration company, wants to auction off Citgo to collect a $1.4 billion debt from Venezuela after negotiations to settle the debt fell through. A forced auction could wrest control of Citgo from the Maduro government and possibly divest Venezuela of a critical revenue source. Citgo, believed to be Venezuela’s largest external asset, became a wholly owned subsidiary of the South American country in 1990.

Crystallex hired Moelis & Co., a global independent investment bank, in connection with the potential auction, according to people familiar with the situation, although Citgo officials have not commented on that report.

Most analysts predicted Citgo would fall into the hands of Venezuela’s creditors at some point as the country experienced debt defaults, hyperinflation and a collapse in oil production. But despite Venezuela’s financial problems, the government wants to keep Citgo’s valued Gulf Coast crude refineries. 

The government recently entered into a payment plan with Crystallex. Venezuela would pay off a $1.4 billion judgment over gold-mining rights, giving Crystallex $500 million up front and pledging additional quarterly installments through 2021.

Crystallex claims the deal was violated when Citgo’s owner, state-owned Petróleos de Venezuela SA, filed U.S. court papers last week arguing that its stake in Citgo is legally protected from seizure under a federal law supporting foreign commercial interests. A U.S. appeals court has frozen proceedings over the potential sale until other legal issues are decided. 

Crystallex was once in line to develop Venezuela’s huge, untapped Las Cristinas gold mine, believed to be one of the four or five largest gold-mines on earth. When the venture failed, the company was forced into bankruptcy in 2011. 

In August, Crystallex convinced a U.S. judge that PdVSA assets in the U.S., including the shares of Citgo’s parent company, could be sold to make up for the lost investment. Tenor Capital Management Co., a New York-based lender to Crystallex, has bankrolled efforts to extract money from Venezuela, using Citgo as leverage.

In court filing, Citgo officials said a forced auction could seriously disrupt operations and put thousands of American jobs at risk. Believed to be Venezuela’s largest external asset, Citgo’s network of refineries, pipelines and terminals make it a flashpoint in the growing geopolitical conflict between Washington and Caracas, in part because U.S. lawmakers worry the assets could be exploited by Russia, a friend to Venezuela’s government.   

Venezuela has protected Citgo during the country’s economic crisis. While defaulting on tens of billions of dollars in debt, PdVSA has continued to pay off the few bondholders that have collateral rights over Citgo, sending them nearly $1 billion in October.