Last Tuesday, sources disclosed that Citgo Petroleum Corp, a U.S. refiner, is formally cutting its links with Petroleos de Venezuela SA, its parent, state-run oil company to meet the sanctions that were imposed by the U.S. on the OPEC country.
The executives at the Houston-based company established a Feb. 26 deadline to end the relationships with PDVSA after the sanctions aimed to curb oil revenues to socialist President Nicolas Maduro and support the transition government of the nation that was formed by Juan Guaido, the head of the Venezuelan congress.
Canada, the United States, and some other nations have recognised Guaido as the legitimate president of Venezuela, however, Maduro still controls public institutions, the military, and PDVSA, which provides 90 percent of the export revenue of the country.
Citgo has stopped the payments to its parent, email communications, subscriptions to corporate services, and minimized mentions to PDVSA on marketing materials and its website.
This month, expatriate Venezuelan employees returned to Venezuela and PDVSA Services, a procurement subsidiary operating from the headquarters of Citgo, was shut down.
A spokesperson for Citgo did not respond to requests for comment regarding the matter.
The company is aiming to free itself of sanctions that have limited access to financing. The sources said that it is prioritising refinancing a revolving credit and term loan by the end of July. On Monday, Fitch, a credit rating firm, placed Citgo on rating watch. It cited heightened refinancing risk because of the sanctions.
One of the sources disclosed: “We have been told that we have to organise the house by Feb. 26 to avoid conflicts with sanctions.”
This month, a new Citgo board of directors was appointed by the Venezuelan congress under Chairwoman Luisa Palacios. Last week, Palacios named a management team under the new executive vice president of the company, Rick Esser. New boards for PDVSA and subsidiaries, PDV Holding and Citgo Holding, also have been appointed by the Venezuelan National Assembly.