President Hugo Chavez instructed his energy minister last night to schedule a meeting immediately with Citgo’s board of directors.
During a televised “reunión de trabajo” with senior government officials at Miraflores Palace, Chavez said that Citgo is “not a gringo company.”
Chavez added that Citgo must be accountable to the Venezuelan government and increase the number of Venezuelans on its payroll in the US because it simply cannot be that the majority of Citgo’s workers are US citizens instead of Venezuelans.
Chavez told Ramirez, “I want to see here the faces of the entire board of directors. That company is ours, and it has to be accountable here…”
Chavez wants Citgo to increase its financial transfers to Venezuela and hire more Venezuelan employees.
The president did not dwell on Citgo’s plans to issue $1.5 billion of senior secured notes in June that will be guaranteed with three of its refineries in Lake Charles, Lemont and Corpus Christi.
But Reuters’ Mariana Parraga noted today that the planned debt issue imposes constraints on Pdvsa’s borrowing capacity. Ms. Parraga’s analysis is accurate, up to a point.
However, the Reuters article fails to pinpoint why Citgo is already heavily indebted to the tune of some $2.5 billion after the proceeds of the June’s bond issue and a further $700 million of borrowing are used to pay down existing debt.
The Chavez regime for years has been squeezing all the cash it can from Citgo, scrimping on essential maintenance (which has created legal difficulties for Citgo), and forcing the company to borrow for the sole purpose of sending the cash immediately to Venezuela where it was promptly pissed away by the revolution.
Chavez basically has run Citgo into the ground, but now Chavez demands “accountability.”
Citgo’s president and directors are all Venezuelan nationals. No “musius” in the group, which includes CEO and board chairman Alejandro Granado, Eudomario Carruyo, the president’s cousin Asdrubal Chavez, and Eulogio del Pino.
Granado arguably knows a bit about the oil industry. But the other three are strictly bush league when it comes to managing a refining company like Citgo. Carruyo is an accountant. Chavez is a chemical engineer and del Pino is a geophysical engineer.
Moreover, Citgo’s CEO and board members are in their present jobs because, like all successful Bolivarian revolutionaries, they passed the presidential loyalty test.
Other senior Venezuelan officials at Citgo are listed here.
Chavez wants to meet with these Bolivarian homeboys to give them a good tongue-lashing, no doubt.
The president plans to demand that 1) more cash be transferred from Citgo to Venezuela, and 2. More Venezuelans than Americans should work at Citgo.
But Citgo is already heavily too heavily indebted, and has too many problems in a very difficult environment for refiners everywhere, to borrow substantially more – unless it pays very high interest charges.
Also, it’s doubtful that serious lenders will be keen on granting Citgo more credit at a time when Venezuela’s government faces compensation claims totaling over $20 billion, and Pdvsa owes over $21 billion – not including the $28 billion of debt owed to China.
As for hiring more Venezuelans to work at Citgo, that depends on the US government which, given the chilly relations between Caracas and Washington, may not be inclined to extend visas to Venezuelans approved by the regime.