Venezuelan government may have a negative impact on Citgo
2022.12.31 01:31
Venezuelan government may have a negative impact on Citgo
Budrigannews.com – 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, oil refiner Citgo Petroleum may face supervisory board shakeups that result in a review of its plans.
Since 2019, 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, have run Citgo, a unit of the state oil company PDVSA owned by Venezuela.
“Regardless of what form it takes,” according to a spokesperson for the U.S. National Security Council, the administration of President Joe Biden will continue to support Venezuela’s interim government. He didn’t say if the new structure would include key protection for Citgo as part of that support.
Guaido’s government had oversight of the nation’s numerous embassies and foreign assets, but it was largely powerless at home, where Socialist President Nicolas Maduro controls nearly all institutions, including the security forces.
The United States has so far rebuffed attempts by creditors to seize Venezuela’s foreign assets in order to recover unpaid debts owned by the South American nation. This includes rebuffing attempts by a U.S. judge to hold an auction of shares in the U.S. parent company of Citgo.
However, a set of executive orders issued by the United States that prevented the Delaware court from auctioning shares of Citgo’s parent company will expire next year. This year, Washington issued a warning to opposition members that the absence of a distinct interim leader could jeopardize that support.
Another scenario in which the commission might take charge: another U.S. court fight over the authenticity of Citgo’s top managerial staff. Maduro unsuccessfully challenged the board that Guaido had appointed in 2019.
In 2020, a federal court approved the executives Guaido appointed to run Citgo. However, these executives have changed several times over the past four years, which has created uncertainty for management.
Horacio Medina, president of the PDVSA ad-hoc board that oversees all PDVSA units outside of the United States, stated, “The institution of the interim government must be preserved.” If we don’t, our ability to protect Venezuela’s assets will be compromised.
Creditors have pursued claims and lawsuits seeking to auction Venezuela-owned assets since Citgo severed ties with its parent, Maduro-controlled state company Petroleos de Venezuela. Additionally, there has been a revolving door of supervisory directors at Citgo, resulting in uncertainty regarding the company’s direction.
Citgo is on track for a $2.5 billion profit this year, following two years of losses. This is due to strong demand, high fuel prices, and global shortages brought on by Russia’s invasion of Ukraine. The seventh-largest refiner in the United States has stated that it intends to invest in the dependability of its operations and repay debt with the profits.
Recently, most resistance groups in Venezuela supported an arrangement to hand authority over board arrangements from Guaido to another super-warning chamber. However, that entity did not emerge right away.
Citgo’s supervisory boards have been advised by lawyers about the difficulties of presenting a new government structure in U.S. courts. Others have said the proposed changes are essentially unlawful.
Before Friday’s vote, Medina said, “From now on, court cases will get even more complicated for us.” He also said that the new government structure could result in the loss of embassies, organizations that defend and represent Venezuelans, and assets owned by Venezuela in several countries.
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