By Corina Pons and Marianna Parraga
CARACAS/MEXICO CITY (Reuters) – Venezuelan opposition leader and self-proclaimed president Juan Guaido said on Monday he has ordered congress to begin the process of naming new boards of directors to state oil company PDVSA and U.S. refining subsidiary Citgo.
Guaido’s team of advisers was rushing to take control of the country’s main foreign asset, U.S. refiner Citgo Petroleum, before a potential bond default that could leave half the company in creditors’ hands, sources close to the talks told Reuters on Monday.
Guaido, who proclaimed himself president last week and has not yet appointed a cabinet, faces the intricate legal challenge of nominating new leadership for PDVSA, the state-owned oil and natural gas company, and its subsidiaries, including Citgo, who would manage the companies during a transition.
It comes as the United States announced new sanctions on PDVSA that involve limiting PDVSA’s transactions with people in the United States, although U.S. refineries can still import Venezuelan oil, Treasury Secretary Steve Mnuchin said on Monday.
Guaido, who runs the opposition-controlled congress, claimed Venezuela’s presidency last week after President Nicolas Maduro was re-elected last year in a vote widely considered a sham. The United States and numerous nations in the hemisphere recognised Guaido as the president but Maduro still controls the military and PDVSA.
Holders of Venezuela’s most watched PDVSA bonds, which mature in 2020, are due a $72 million interest payment in late April. Those bonds are collateralised with 50.1 percent of Citgo Holdings’ equity, meaning in the absence of a payment, creditors could seize control of the company.
Without sources of revenue and control of foreign assets, Guaido’s team faces long odds in succeeding, despite massive protests against Maduro’s regime due to an economic crisis that has caused millions to flee the country. Many people are starving while inflation has skyrocketed and left basic goods unaffordable.
The United States imposed sanctions on Venezuela in 2017 that have prevented Citgo from repatriating dividends to its parent company. It had about $500 million in cash at the end of September, according to a creditor who spoke to Reuters last week, and $900 million in available credit.
Citgo separately faces a July deadline to refinance its revolving credit, a task that could be delayed due to sanctions affecting the subsidiary’s ability to access to credit.
(Reporting by Corina Pons and Marianna Parraga; Writing by Cynthia Osterman; Editing by Lisa Shumaker and Bill Trott)