PDVSA Citgo: Venezuela’s crown jewel enters the political dispute

Citgo

Citgo Petroleum, the PDVSA U.S subsidiary, symbolizes what was a prosperous time in the South American country’s oil sector. The acquisition of this Houston-based company was part of an ambitious internationalization plan designed by the parent company in Caracas.

This way, PDVSA solidified its presence in the U.S. fuel market, its main crude buyer, and at the same time guaranteed its oil would be placed in the North American territory.

Venezuela carried out this type of operations all over the world. In Germany, for instance, it held a 50 percent share of a refinery owned by Veba Oel, thus increasing its positioning in the Old Continent.

This way, the modest Venezuelan oil company, nationalized by democratic governments in the 1970s, was on the same level as some majors in the competitive global oil business. This was a source of pride for the small Latin American nation.

Socialism of the 21st century changes the scenario

Nevertheless, Hugo Chavez, a socialist military that made a failed attempt at a coup d’état and then went on to win the presidential elections, saw things differently.

The lieutenant colonel harshly criticized that PDVSA would play along with what he called “wild capitalism”. Since the start of his government, he devised strategies aimed at turning the oil company into the financial arm of his political project.

More than once, he claimed that PDVSA would sell Citgo (as it did with its share in Veba Oel), which never actually happened. However, his administration’s energy policies significantly weakened the once thriving company.

In this context, PDVSA Citgo became one of Chavez’ strongholds in the United States. An inheritance that, after his death, was handed to his successor, Nicolas Maduro.

Crisis flourishes in Venezuela

Without the popularity of Chavez, Maduro was forced to face the consequences of the model he had inherited from his predecessor. Excessive dependence on oil revenue and the near destruction of the private sector had their effects.

This is how Venezuela, in spite of its many resources and industrial power, came to be in a crisis that is nowadays known across the world.

In this context, the opposition has been gaining ground, such as winning an absolute majority in the country’s National Assembly. As a response, Maduro and his collaborators began to implement arbitrary and anti-constitutional measures to hold on to power.

These actions included holding elections without the proper preparation time, with no true representation from the opposition, without guarantees, and without impartial observers. Thus, Maduro self-reelected for a new presidential term. Nonetheless, the process was not recognized by the opposition and a large part of the international community.

Transitional government

In line with this, the president of the National Assembly Juan Guaidó has assumed the national executive powers under the Constitution.

However, Maduro still maintains his grip on power. He controls the public authorities (except for the Parliament), as well as state companies, the military, the police, and PDVSA.

On the other hand, the United States has implemented a series of sanctions that have helped Guaidó’s interim government control, at least partially, part of Venezuela’s financial resources. And PDVSA Citgo is in the middle of this struggle.

New Citgo directive

Asdrúbal Chavez was the president of Citgo Petroleum, but on January 30 he received a notice stating that would no longer have access to the company’s assets and that his email account had been closed.

The subsidiary was now controlled by Citgo senior executive Rick Esser, who was backed by both the interim government of Guaidó and the Trump administration. He will be responsible for paving the road to a new anti-Maduro board of directors.

Esser monitored the actions taken to isolate Chavez, cousin of late President Hugo Chavez, and is expected to remove other senior executives linked to the Maduro regime.

An ongoing fight

The battle for Citgo will be critical in the efforts to loosen Maduro’s grip on power, seeking to have a key source of income for a future government.

Citgo stands as PDVSA’s last financially stable asset, earning more than $23 billion a year and accounting for 4 percent of the fuel consumed in the U.S.

Inside sources told Reuters that many Citgo employees are concerned about working under the control of a socialist administration accused of serious crimes. In view of this, they have been waiting for a new Board – formed by members chosen by the opposition-controlled Parliament – to be officially appointed.

The new Board held its first meeting in Houston on Thursday. There, it moved to appoint executives to replace several employees that have been removed, Reuters added. Citgo has yet to reveal its new composition.

For more information, check Energía16

See also: India becomes the No 1 buyer of Venezuelan oil post U.S. sanctions

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