Overview
Venezuelan interim President Delcy Rodriguez’s government is moving to assert control over the boards that govern PDVSA’s U.S. subsidiaries, among them Houston-based refiner Citgo Petroleum, four people familiar with the matter said. The plan follows Washington’s recognition in March of Rodriguez as Venezuela’s leader after the capture of President Nicolas Maduro, a development that reopened the prospect of Venezuelan officials returning to U.S. diplomatic posts and regaining control of overseas assets that had fallen under opposition-appointed managers.
Clearance and licensing hurdles
Those preparing the changes have not yet finalized the lists of proposed board members, the sources said, because individual names must receive clearance from the U.S. Treasury. Some candidates floated by Rodriguez’s administration were reportedly not well received in Washington, according to two of the sources. If the Treasury approves the nominees, the Office of Foreign Assets Control - OFAC - would need to issue a specific license to allow the new directors to assume their roles.
One source said Treasury officials have already contacted current members of Citgo’s supervisory board to indicate that new board members designated by Rodriguez are expected to be authorized, subject to Washington clearing the individuals. Another of the sources added that the U.S. State Department must also align with those appointments and provide policy guidance to OFAC before a license can be issued.
Law firms and contracts under review
In parallel with the push to change boards, envoys for Rodriguez have informed several law firms that have represented Venezuela, PDVSA and related entities in U.S. courts that their agreements are under review and could be suspended, according to the sources. There was no immediate response to requests for comment from Venezuela’s ministries of oil and communications, PDVSA or Citgo, and neither the U.S. Treasury nor the State Department replied to requests for comment. Boards currently supervising Citgo declined to comment.
Slow-moving governance shifts
In March, PDVSA’s board ratified Asdrubal Chavez as the head of its U.S. subsidiaries. Chavez, a cousin of the late Venezuelan President Hugo Chavez, had previously been denied a U.S. visa when proposed to lead Citgo from Houston and has not effectively managed the companies for more than seven years, the sources said.
Alongside Chavez’s ratification, PDVSA’s March appointments to U.S. subsidiary boards included Nelson Ferrer, Alejandro Escarra and Ricardo Gomez. The three are described by the sources as executives close to Rodriguez who in some instances had prior roles at Citgo during the Chavez administration. It remains unclear whether the U.S. Treasury will authorize those particular executives to serve on the boards.
Legal backdrop: ownership dispute and auction
The potential board changes come while Citgo continues legal efforts in U.S. courts to reverse a sale of its parent, PDV Holding, to an affiliate of Elliott Investment Management. Citgo has argued in court filings that the auction, held to satisfy claims tied to defaults and expropriations in Venezuela, was unfair, rife with conflicts of interest and diminished the value of the assets.
The judicially supervised auction was completed last year after a Delaware judge approved a $5.9 billion bid by Amber Energy, an affiliate of Elliott. However, the final transfer of ownership remains contingent on approval by the U.S. Treasury, which has shielded Citgo from creditor actions since the company severed formal ties with Caracas-based PDVSA in 2019 amid U.S. sanctions. Elliott declined to comment, according to the sources.
Implications
The situation places regulatory clearance and U.S. foreign policy decisions at the center of control over a major U.S. refiner. Any change in board composition would require coordination between Treasury, OFAC and the State Department and could intersect with ongoing litigation and creditor protections that have governed Citgo’s status since 2019.