Citgo’s new chairwoman reassures industry in wake of Venezuelan crisis
Luisa Palacios, the recently appointed chairwoman of Citgo Petroleum, reassured the energy industry Tuesday that the Houston refiner remains reliable and flexible, despite the political and economic crisis that has crippled its parent, the Venezuelan national oil company PDVSA.
Palacios, speaking in Houston at CERAWeek by IHS Markit energy conference, made her first major public appearance since she and new Citgo board were appointed by the opposition government of Juan Guaido, whom the United States and its allies have recognized as the Venezuelan president. They replaced directors loyal to President Nicolas Maduro, whom the Trump administration is working to oust.
Addressing a packed room, Palacios struck an optimistic tone about Citgo’s current operations. The Houston refiner was a major customer for Venezuelan crude oil exports to the U.S. until sanctions were put in place in January.
“For the last month (Citgo) has been developing contingency plans because of the risk that could be in place,” Palacios said. “ I have to say, the flexibility of our refiners has allowed us to adjust to shock in a quite substantial way.”
Related: Board, named by opposition, takes control of Citgo
Palacios said Citgo, which operates refineries in Texas, Louisiana and Illinois, has been “a very important receiver” of Venezuelan crude. The company imported about 56 million barrels of Venezuelan crude in the first 10 months of last year, according to the U.S. Energy Department.
But Venezuelan oil only represents about 25 percent of the company’s total crude intake, she said. Last year, Citgo’s refineries ran 60 different types of crude from 38 suppliers in 19 countries, she pointed out.
So while the sanctions affected the type of crude the company uses, it wasn’t a catastrophic disruption to the company’s refining system.
“It’s a shock, but it’s one we’re very well placed to weather,” she said.
Citgo, which employs about 3,4000 in the United States, including about 800 in Houston, has become a piece in the geopolitical power struggle between Trump administration and Maduro, whose recent re-election was marred by fraud and voting irregularities, according to independent observers. It has also become a prize for the long list of Venezuela’s and PDVSA’s creditors, some of whom have made moves to seize Citgo’s assets.
At first it was unclear whether Citgo would follow Guaido’s board, but the company officially has now backed the new opposition-appointed corporate board. The new board ousted pro-Maduro executives, including the president, Asdrubal Chavez, the cousin of the late socialist leader and Maduro mentor Hugo Chavez.
Palacios, the first woman to lead Citgo’s board, said the new directors represent a diverse mix of executives with institutional knowledge of PDVSA from the days when it first bought Citgo in 1980s and a newer generation with broad professional experience in finance. Palacios herself is an outsider with a background in finance at companies such as Barclays Capital and Japan Bank for International Cooperation.
Related: Venezuelan sanctions won’t choke U.S. refinery runs
Most recently though she focused on Latin American research as senior managing director at the geopolitical analysis firm Medley Global Advisors.
Protecting an asset
Palacios said the new board will focus on protecting Citgo as an asset for post-Maduro Venezuela, strengthening its financial stability and enhancing corporate governance.
“I have to say I am very impressed with this asset, with this company. I think the board is very committed to providing value for our shareholders,” Palacios said. “This is an asset that will not only be able to increase value to shareholders, this is a company to give back.”
The company could aide in helping Venezuela recover its energy sector and economy by continuing to supply reliable gasoline and diesel.
“There is a lot we can do from the U.S.,” she said.