February 15, 2019
By Luc Cohen, Matt Spetalnick and Patricia Zengerle
WASHINGTON (Reuters) – Venezuela’s opposition has no plans to use funds belonging to U.S. refiner Citgo, which is owned by state oil company PDVSA, despite having named a new board for the company this week, the self-declared interim government’s U.S. envoy said on Friday.
The opposition will not make changes to the refining company’s management or operations until Juan Guaido, the leader of Venezuela’s opposition-controlled Congress who swore himself in as president last month, has control of state functions, said Carlos Vecchio, Guaido’s representative in Washington.
“We are not touching that money. It belongs to Citgo as a corporation,” Vecchio said in an interview. “We want Citgo in financial health and for operations to continue, and for that money to stay there for when we are able to take effective control of power and the state’s institutions, including PDVSA.”
Citgo, which owns about 4 percent of U.S. oil refining capacity, has become central to the power struggle between Guaido and embattled socialist President Nicolas Maduro since the United States slapped sanctions on state-owned Petroleos de Venezuela, known as PDVSA, last month.
The sanctions require U.S. companies importing Venezuelan crude to make payments into an account held in escrow for Guaido’s government, in a bid to oust Maduro, who has overseen a collapse in oil production in the OPEC nation, which is undergoing a severe economic and humanitarian crisis.
Vecchio said the opposition had not yet opened an account with any U.S. financial institution.
The sanctions also complicate Venezuela’s ability to make an April payment on PDVSA’s 2020 bond, for which part of Citgo has been put up as collateral. That could prompt creditors to attempt to seize the refining company’s assets, a situation Vecchio said Guaido’s team wanted to avoid.
PDVSA has also been struggling to refinance a revolving line of credit by a July deadline, people close to the matter said.
Guaido has invoked Venezuela’s constitution to claim the presidency, arguing that the May 2018 vote resulting in Maduro’s re-election was a sham. Maduro has called Guaido a U.S.-backed puppet, and vowed that he will not allow Citgo to be “stolen.”
Vecchio said the opposition upon taking power would prioritize attracting private investment to boost oil production, which has fallen to near 70-year lows, but had no plans to privatize PDVSA.
“There is a very clear consensus that PDVSA should be maintained as property of the state,” Vecchio said. “But if we want to increase production as much as we hope, most of the investment is going to have to come from the private sector because the state will not have anything to invest.”
He added that Venezuela would not leave OPEC, the oil producers’ cartel of which it is a founding member, but also would not accept any OPEC deals that would limit the South American country’s efforts to boost oil production.
“As I see it, OPEC today has a diminished role on the world stage because it does not have the market it once had,” Vecchio said, citing growing U.S. crude output.
(Additional reporting by Kieran Murray; Editing by Tom Brown)