What is CITGO, the oil company in the middle of the battle for power in Venezuela

[#Drennn.]

 

The government representative of Juan Guaidó in the United States, Carlos Vecchio, visited the CITGO headquarters in Houston, Texas.

WASHINGTON D.C. - While the interim government of Venezuela seeks to seize political power, the United States is fighting a battle for the future of the country's main export: oil. The dispute centers around CITGO, an oil company based in Houston, Texas, a subsidiary of Petróleos de Venezuela (PDVSA). A few weeks after swearing in Juan Guaidó as interim president, the National Assembly of Venezuela appointed a new board of directors for the company. "With this decision we are not only protecting our assets, we also prevent the destruction from continuing and losing the company"; with these words the interim president announced the appointments.

What is the importance of CITGO for the country?

Almost half of the oil exported in Venezuela goes to the United States, according to data from the Observatory of Economic Complexity of the Massachusetts Institute of Technology. CITGO is the main importer of Venezuelan oil in the US, according to Forbes. The country receives money and petroleum products from the company. Revenues from sales to the United States are one of the few means of foreign exchange to the government of Nicolás Maduro and, therefore, to the country. The shipments that go to the other big buyers, China and Russia, go towards the payment of debts and do not represent liquidity.

This is the reason why the USA imposed sanctions on PDVSA: to leave the president in dispute without an important source of capital. In addition, Venezuela receives from CITGO light oil and naphtha, products that it needs to dilute the heavy oil produced in the country and that it can move through the oil pipelines to be dispatched. Therefore, the sanctions will also affect oil production, which has already been drastically reduced in recent years: from 2.4 million barrels a day in 2015 to 1.1 million in 2018. The sanctions, announced at the end of January, prohibit the payment for the oil that CITGO buys from Venezuela from getting to the Maduro government but from the bank accounts available to the interim government. This will cause PDVSA to stop imports into the United States, economist Francisco Rodríguez told the Voice of America.

 

Where did CITGO come from?

 

CITGO was founded in 1910 by Henry Doherty, an American businessman. The company changed hands several times until it was bought, between 1986 and 1990, by PDVSA. It has 3,400 employees, according to the Associated Press, three refineries - in Louisiana, Texas and Illinois - and a network of terminals and pipelines in 24 US state. During the government of Hugo Chávez, in spite of the turbulent relations between Venezuela and the United States, the commercial relationship between both countries remained. However, the former president, who died in 2013, placed in both PDVSA and CITGO, people favorable to his government in the top positions of the companies. Last year, in what many call a "purge," Nicolás Maduro's government arrested several workers in the oil industry, including Nelson Martínez, the CEO of CITGO, who died in December last year in prison.