ANALYSIS-Citgo could face further upheaval under political changes in Venezuela

By Marianna Parraga

HOUSTON, December 30 (Reuters)Oil refiner Citgo Petroleum could face supervisory board reshuffles leading to a review of its plans following Friday’s vote by Venezuela’s opposition-led National Assembly to dissolve an interim government and appoint a commission to oversee the country’s foreign assets, including Citgo.

Venezuela-owned Citgo, a unit of state 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 the legitimate leader. from Venezuela. and who was ousted 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 “whatever form it takes”. He did not specify whether this support included the extension a key protection to Citgo under the new structure.

Despite being mostly powerless at home, where socialist President Nicolas Maduro wields control over almost every institution, including the security forces, Guaido’s government had oversaw the country’s foreign assets and numerous embassies.

The United States has so far blocked efforts by creditors to seize the South American country’s foreign assets to collect unpaid debts held by Venezuela, including pushing back against a US judge’s efforts to stage an auction of shares in the US parent company from Citgo.


But a set of U.S. executive orders that prevented Citgo’s parent company shares from being auctioned off by the Delaware court are due to expire next year. This year, Washington warned opposition officials that the loss of a clear interim leader could jeopardize that support.

Another potential scenario with the commission’s takeover: a new American legal battle over the legitimacy of Citgo’s board of directors. In 2019, Maduro unsuccessfully challenged the board appointed by Guaido.

A federal court in 2020 ratified the executives appointed by Guaido to run Citgo. But these leaders have changed several times over the past four years, leading to uncertainty among management.

“The institution of the interim government must be preserved,” said Horacio Medina, chairman of the ad hoc PDVSA board that oversees all PDVSA units overseas. “Otherwise, our position to defend Venezuelan assets will be compromised.”

Since Citgo severed ties with its parent company, Maduro-controlled state-owned Petroleos de Venezuela PDVSA.ULCreditors have pursued claims and lawsuits seeking to auction off Venezuelan-owned assets, amid a revolving door by Citgo’s supervisory directors that has led to uncertainty over the company’s direction.


After two years of losses, Citgo is on track for a profit of $2.5 billion this year, reflecting high fuel prices on strong demand and global shortages caused by Russia’s invasion of Ukraine. The seventh-largest US refiner said it plans to use the profits to pay down debt and invest in the reliability of its operations.

Earlier this year, most opposition parties in Venezuela have approved a deal to transfer authority over Guaido board appointments to a new super-advisory board. But this entity was not formed immediately afterwards.

Lawyers advising Citgo’s supervisory boards have warned of the challenges of bringing a new government structure to U.S. courts. Others have said the proposed changes are simply unconstitutional.

“From now on, legal cases will become even more complicated for us,” Medina said ahead of Friday’s vote, adding that the new government structure could lead to the loss of embassies and entities defending and representing Venezuelans and assets owned by Venezuela in several countries. .

(Reporting by Marianna Parraga; Editing by Leslie Adler)

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