Analysis-Citgo may face new upheaval under Venezuela’s political changes
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By Marianna Parraga
HOUSTON (Reuters) – Oil refiner Citgo Petroleum may face board reshuffles leading to a review of its plans after Venezuela’s opposition-led National Assembly voted on Friday to dissolve an interim government and set up a commission to oversee the country’s foreign assets Landes, including Citgo.
Venezuela’s Citgo, a unit of state-owned oil company PDVSA, has been run since 2019 by boards appointed by a congress led by opposition leader Juan Guaido, whom Washington has recognized as Venezuela’s legitimate leader and who was ousted on Friday.
Citgo did not immediately respond to a request for comment.
A spokesman for the US National Security Council said President Joe Biden’s administration will continue to support Venezuela’s interim government “regardless of what form it takes”. He did not comment on whether that support included extending key protection to Citgo as part of the new structure.
While largely powerless at home, where Socialist President Nicolas Maduro wields control of nearly all institutions, including the security forces, Guaido’s government had been monitoring the country’s foreign assets and many embassies.
The United States has so far blocked efforts by creditors to seize the South American country’s foreign assets to collect Venezuela’s unpaid debts, including dismissing efforts by a US judge to conduct an auction of shares in Citgo’s US parent company.
EXECUTION ORDERS IN PROGRESS
But a series of US executive orders that prevented shares in Citgo’s parent company from being auctioned off by the Delaware court are set to expire next year. Washington earlier this year warned opposition officials that the loss of a clear interim leader could jeopardize that support.
Another possible Commission takeover scenario: a new US court battle over the legitimacy of Citgo’s board of directors. In 2019, Maduro unsuccessfully challenged the board installed by Guaido.
A federal court in 2020 upheld the executives appointed by Guaido to run Citgo. But those executives have changed hands several times over the past four years, creating uncertainty in management.
“The institution of interim government must be preserved,” said Horacio Medina, president of the PDVSA ad hoc board, which oversees all PDVSA units abroad. “Otherwise, our position to defend Venezuelan assets will be jeopardized.”
Since Citgo severed ties with its parent company, Maduro-controlled state-owned Petroleos de Venezuela, creditors have filed claims and lawsuits to auction Venezuela-owned assets amid a revolving door by Citgo’s boards of directors that has fueled uncertainty over direction of the company led.
After two years of losses, Citgo is on track for a $2.5 billion profit this year, reflecting high fuel prices due to strong demand and global shortages caused by the Russian invasion of Ukraine. The seventh largest US refiner has said it will use the profits to pay down debt and invest in the reliability of its operations.
Earlier this year, most opposition parties in Venezuela agreed to a deal to hand over the authority of appointing Guaido’s board members to a new super advisory council. But this entity was not formed immediately afterwards.
Lawyers advising Citgo’s boards of directors have warned of the challenges of proposing a new government structure in US courts. Others have said the proposed changes are simply unconstitutional.
“From now on, court proceedings will become even more complicated for us,” Medina said ahead of Friday’s vote, adding that the new government structure could result in a loss of embassies and entities that defend and represent Venezuelans and Venezuelan assets in several countries.
(Reporting by Marianna Parraga; Editing by Leslie Adler)