Venezuela’s opposition gets reprieve in battle to keep Citgo

Scott Smith
Associated Press

Caracas, Venezuela – The White House on Thursday temporarily shielded Venezuela’s opposition coalition led by Juan Guaidó from losing the country’s valuable U.S.-based Citgo refineries.

The opposition is banking on profits from its Houston-based company to fund the crisis-torn nation’s recovery – if they are ever able to force President Nicolás Maduro from power.

The U.S. Treasury Department issued an order giving Guaidó’s team three months to “restructure or refinance payments.” A likely failure to make $913 million debt payment due Monday could have triggered foreclosure.

FILE - In this Oct. 1, 2019 file photo, Juan Guaido, opposition leader and self-proclaimed interim president of Venezuela, attends the weekly legislative session in Caracas, Venezuela.

Russ Dallen, a broker at Miami-based Caracas Capital Markets, said that in a post-Maduro world, Citgo would be significant source of income to rebuild Venezuela by refining and selling crude from the country’s vast reserves.

“Citgo is their sure thing,” Dallen said. “It is guaranteed fast cash whenever you need it. Citgo can turn around and sell that oil or refine it.”

Venezuela has owned Citgo since the 1980s as part of the state-run oil company PDVSA. It has three refineries in Louisiana, Texas and Illinois in addition to a network of pipelines crisscrossing 23 states. It provides between 5% and 10% of U.S. gasoline.

Guaidó claimed presidential powers in January as head of the opposition-led National Assembly, vowing to end Maduro’s rule and two decades of socialist leadership as the nation struggles in political and economic crisis.

After the Trump administration recognized Guaidó as Venezuela’s legitimate leader, U.S. courts granted approval to a board appointed by the opposition to take control of Citgo, valued at an estimated $8 billion.

In 2016, Maduro’s government made a deal with some bondholders of the state-owned oil company PDVSA, agreeing to swap their bonds for new ones maturing in 2020.

Maduro gave the creditors 50.1% of Citgo as collateral over objections from the opposition-led National Assembly, which argued the deal was illegally carried out without their approval.

Maduro accuses the opposition of illegally getting control of Citgo, saying it is part of the “imperialist” United States’ attempt to install Guaidó as a “puppet” government.