February 10, 2019 / 4:34 AM / in 13 days

Exclusive: Venezuela moves to replace U.S. executives on Citgo board - sources

(Reuters) - Venezuelan state-run oil company PDVSA is taking steps to remove at least two American executives from the board of directors of its U.S. refining subsidiary, Citgo Petroleum Corp, according to people close to the matter.

FILE PHOTO: The corporate logos of the state oil company PDVSA and Citgo Petroleum Corp are seen in Caracas, Venezuela April 30, 2018. REUTERS/Marco Bello/File Photo

Citgo is facing unprecedented challenges to its finances and management after the U.S. government last week imposed tough sanctions on Petroleos de Venezuela designed to prevent oil revenue from going to leftist President Nicolas Maduro. The United States and dozens of other nations have refused to recognize Maduro, viewing his reelection last year to another six-year term as fraudulent.

Venezuela’s self-proclaimed president Juan Guaido is setting up bank accounts with U.S. help that would take income accrued by Citgo, Venezuela’s top foreign asset, to finance an interim government. Maduro has denounced Guaido as a U.S. puppet who is seeking to foment a coup.

The board of Houston-based Citgo includes at least two U.S. citizens, Art Klein and Rick Esser, as well as Venezuelans Asdrubal Chavez, Frank Gygax, Nepmar Escalona, Simon Suarez and Alejandro Escarra, according to one of the people familiar with the matter.

PDVSA and Citgo did not respond to requests for comment. Esser and Klein did not immediately reply to emails and phone calls seeking comment on their status.

It was unclear if PDVSA’s board has already approved the changes at Citgo’s board and who would replace the American executives.

Citgo also has an executive board that includes the refiner’s general managers, its corporate treasurer and the controller, and other vice presidents.

Esser was among a team of Citgo executives who met with U.S. officials last month in Washington amid efforts by Guaido and the U.S. government to appoint a new Citgo board of directors.

Citgo operates three U.S. refineries that supply about 4 percent of total U.S. fuel production and is PDVSA’s largest U.S. customer for its oil exports. Sanctions have forced Citgo and other U.S. refiners to seek crude oil supplies from other nations.

Delaware-registered Citgo operates plants in Texas, Louisiana and Illinois that are capable of processing a combined 750,000 barrels per day of oil. It distributes fuel through about 5,500 independent retail stations in 29 U.S. states.

Citgo, which has been owned by PDVSA for three decades, has not publicly detailed the composition of its current board since late 2017, when Asdrubal Chavez, a cousin of the late Venezuelan leader Hugo Chavez, was nominated by Maduro to run the business unit.

Asdrubal Chavez, Escalona and Escarra have been working from an office in the Bahamas since the U.S. sanctions were issued, according to the sources.

On Friday, Venezuelan oil minister and PDVSA President Manuel Quevedo held a meeting with his deputy ministers and directors, one of the people said. The agenda was not revealed.

Reporting by Marianna Parraga in Mexico City, Deisy Buitrago and Corina Pons in Caracas; editing by Gary McWilliams and Leslie Adler

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