(S&P Global Platts, 24.Jan.2019) — Venezuela’s self-declared interim president, Juan Guaido, will announce plans to revamp the board of Citgo Petroleum to give the embattled refiner fresh leadership and ease political pressures on the company, sources close to the opposition leader told S&P Global Platts.
The announcement could come as soon as today, the sources said, as Guaido aims to build momentum behind his move to oust President Nicolas Maduro following violent protests Wednesday that left 13 dead.
Citgo is the US-based refining subsidiary of Venezuelan state-owned oil company PDVSA, with units in Louisiana, Texas and Illinois.
Current Citgo President Asdrubal Chavez is barred from entering the US after the White House revoked his visa.
Just under half of the refiner has been leveraged as collateral to Russia’s Rosneft to cover a $1.5 billion loan to the Venezuelan government, and other creditors have laid claims to the company over unpaid debts.
Guaido, the opposition leader who was recently named head of Venezuela’s National Assembly, declared himself the country’s interim president on Wednesday and was quickly recognized by the US, Canada and several other countries.
Mexico, Russia and Cuba, however, have said they will stand by Maduro, who said he would break diplomatic and political relations with the US.
In addition to reshaping the leadership of Citgo, Guaido plans to introduce a new national hydrocarbons law that establishes flexible fiscal and contractual terms for projects adapted to oil prices and the oil investment cycle, as well as enact an anti-corruption law aimed at PDVSA, sources said.
A new hydrocarbons agency would be created to offer bidding rounds for projects in natural gas and conventional, heavy and extra-heavy crude, the sources added.
Guaido has not settled on any appointments for oil minister or PDVSA chief yet, “but they will be people with experience,” one source said.
The current oil minister and head of PDVSA is Manuel Quevedo, a former brigadier general in the National Guard with no previous oil experience before being tapped to his position by Maduro in late 2017.
Quevedo, in his capacity as Venezuela’s top OPEC representative, currently holds the rotating OPEC presidency for 2019, which involves chairing meetings, calling any extraordinary meetings and serving as the organization’s main ministerial spokesman.
BUYER BEWARE
Last May, after Maduro won re-election in a disputed election, the US imposed sanctions that have severely hampered PDVSA’s ability to raise new financing or restructure its crushing debt load.
US officials said they are prepared to invoke further sanctions on Venezuela’s oil sector, including a full embargo on US imports of Venezuelan crude, if Maduro’s standoff with Guaido escalates in further violence or political crackdown.
Market sources said the US’ recognition of Guaido as the legitimate leader of Venezuela could prompt US refiners to stop purchases of Venezuelan crude while Maduro remains in power.
“Trading with that country now equals trading with a regime not recognized by the US government, and we are not sure that many companies will take that risk and that banks will finance that new risk,” said Olivier Jakob, an analyst with consultancy Petromatrix.
Chevron, PBF Energy, Valero and Citgo are the largest US refiners of Venezuelan crude, according to the US Energy Information Administration. US imports of Venezuelan crude averaged about 574,000 b/d in December, down roughly 40% from July 2016, when US refiners imported more than 850,700 b/d, according to US Customs and Border Protection data. US imports of Venezuelan crude fell as low as 409,150 b/d in February 2018, the data showed.
Venezuelan oil output fell to 1.17 million b/d in December, according to the latest S&P Global Platts survey. The country’s output is forecast to decline by 350,000 b/d through 2019, but, depending on sanctions and other risk factors, could fall by as much as 800,000 b/d by late this year, according to investment bank Barclays.
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