Houston’s Citgo Petroleum is under attack on multiple fronts. Creditors for its parent company want to seize its refineries. It’s at the center of a fight for control over Venezuela. The Justice Department is investigating it and its parent company’s role in an alleged foreign bribery scheme. And its facing mounting pressure to do something about six of its former executives detained in Venezuela for nearly two years.
In the midst of this legal and political turmoil, the has selected one of its own former leaders and a veteran of the oil industry to help it continue to weather the storm of uncertainty.
It was a sense of personal duty that pulled Carlos Jorda back to Citgo, 17 years after he served on its board of directors. Jorda said he felt an obligation to serve his former employer and to the government of opposition leader Juan Guaido. Although Guaido has struggled to wrest control away from socialist leader Nicolas Maduro, his efforts to consolidate control over Citgo, a key foreign asset, have been successful thus far.
“I felt an obligation to the legitimate government and President Guaido … this is my contribution,” Jorda said, in his first interview with the Houston Chronicle since he was hired as CEO last week. He was accompanied in the interview by Citgo’s chairwoman Luisa Palacios, the first chairwoman appointed by the Guaido government in February.
A former executive with the Petroleos de Venezuela, S.A., or PDVSA, Jorda also held an executive role with the state-owned oil company’s U.S. subsidiary PDV America and previously served as chairman of the board for CITGO from 1999 to 2002. The chemical engineer has five decades of experience in the oil and gas industry. He’s spent the last several years as a consultant to major oil companies and investors and served as a board member for Delek USA, a U.S.-based refining and marketing company.
“I’m very excited to be back to be here at Citgo,” Jorda said. “ I had chance to meet with the management team, many of these people who were much younger when I was here, and they’re really a competent group of professionals. I find the company operationally in very good shape.”
Jorda said his first tasks will be to meet Citgo’s current employees, get up to speed with the company’s operations, find ways to further boost its earnings and reduce its debt and to “try to keep employees happy.”
Palacios added that the new board has helped to usher in a new era and “positive change” for employees since it was appointed by the Guaido government in February.
“One of our foremost objectives is that everyone at Citgo is happy to be here,” Palacios said. “This company has 100 year of existence and we wanted to bring that sense of pride in the company back.”
Jorda will take control of company that earned $834 million last year. Citgo describes itself as the fifth largest oil refiner in the nation with its three oil refineries in Lake Charles, La.,Corpus Christi and Lemont, Ill. processing total of 829,000 barrels a day with crude representing 716,000 barrels a day last year. The company has roughly 3,400 employees, including about 800 employees in Houston, plus about 5,000 retail gas stations nationally.
In some ways, the oil refiner is a victim of its own financial success. Creditors for Venezuela and PDVSA are circling Citgo and attempting to seize control of the refiner as a way to satisfy the country’s debts. Shares in its U.S. parent, Citgo Holding, were used by Maduro as collateral for debt due in 2020 and for a loan from Russian oil company Rosneft.
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Last month a U.S. Court of Appeals for the Third Circuit sided with one of Venezuela’s creditors, defunct Canadian mining company Crystallex International, in a ruling that could allow Crystallex to seize Citgo’s assets as a way to collect on a $1.4 billion debt.
If the latest ruling is upheld and the Trump administration does not intervene, Citgo could be auctioned to the highest bidder, which could be other U.S. refiners such as San Antonio-based Valero Energy or Ohio-based Marathon Petroleum.
It’s possible the Crystallex ruling could open the door for other creditors of Venezuela and PDVSA to go after Citgo for unpaid debts. Houston’s ConocoPhillips, has only received a fraction of payments for in a $2 billion arbitration award against PDVSA.
But Palacios downplayed the potential risks to Citgo in the Crystallex case.
She added that the company’s recent refinancing of $1.87 billion in debt is a testament to credit markets faith in the financial operations of the company.
“This refinancing was successful because of the confidence that the market has in this board and the company strong financial operations,” Palacios said. “The bond holders and the markets are just completely aware of the different risk that surround the company and are completely comfortable with them.”
