January 25, 2019 / 7:53 PM / 22 days ago

Refiner Citgo prepares to fend off Venezuela's opposition government

* Maduro says to defend U.S. refiner Citgo as Venezuelan property

* Citgo board retreats to Bahamas to plan legal moves

* Citgo strategy to avoid U.S. attempts to divert revenues

* PDVSA unit Citgo is biggest U.S. importer of Venezuelan crude

By Marianna Parraga and Corina Pons

MEXICO CITY/CARACAS, Jan 25 (Reuters) - Venezuela’s most important foreign asset, its $10 billion U.S. refining arm Citgo Petroleum, is hunkering down to arm itself with a legal strategy to block efforts for its board to be removed and its revenues diverted to an opposition government, sources close to the talks said.

Juan Guaido, the head of the opposition-controlled congress who proclaimed himself president this week, is considering naming a new team to lead Citgo, two sources told Reuters.

But President Nicolas Maduro said in Caracas on Friday that his government would seek to defend the refiner, raising the prospect that Citgo could become a battleground between the two claimants to the leadership of Venezuela.

“Citgo is the property of the Venezuelan state,” Maduro said, adding that the OPEC-member country plans to continue selling oil to the United States, its first destination for crude exports and state-run PDVSA’s largest source of cash.

The United States led numerous other Western Hemisphere nations in recognizing Guaido as president of Venezuela this week. The White House has been exploring ways to redirect oil revenues to the opposition, but the path to engineering such a move is unclear.

Citgo is a wholly-owned subsidiary of Petroleos de Venezuela, or PDVSA, but it has not been able to send its revenues, in the form of dividends, to Venezuela due to U.S. sanctions. The company’s 750,000-barrel-per-day refining network is the biggest U.S. importer of Venezuelan crude.

Run by appointees of Maduro, Citgo’s board earlier this week traveled to the Bahamas, where a company office was installed last year. It will seek legal avenues for the team to continue leading the firm, two company sources said.

Citgo President Asdrubal Chavez has been called to meetings in Caracas, according to those sources. He is the cousin of late President Hugo Chavez, who preceded Maduro.

A Citgo vice president separately traveled to Washington this week for talks on the company’s future, the sources added.

“Citgo is registered in Delaware. It belongs to Venezuela, which now has two presidents. The United States only recognizes one, but that is not the one who appointed people at Citgo’s board,” one of the sources said, explaining the legal challenges.

A spokeswoman at Houston-based Citgo said executives were not being made available for interviews at this time.

A Venezuelan opposition source familiar with Guaido’s plans said the goal of the Citgo effort was to “raise funds,” adding that “we have to show that we’ve got resources. It’s a sign of the pressure that we’re putting on (Maduro).”

Guaido is also considering making a request for funds from international institutions such as the International Monetary Fund, sources said.

Another source close to Guaido’s team said the group aims to minimize what they consider Maduro’s “usurpation of the Republic’s funds.”

The White House earlier this month resumed talks with U.S. oil firms to explore new sanctions on Venezuela, including an embargo on Venezuelan crude sales to the United States and a prohibition on U.S. firms exporting fuels to the South American country.

The White House has resisted imposing an embargo on imports from Venezuela, in part because of opposition from U.S. refiners strapped for supply of heavy crude oil.

U.S. refiners currently import about 500,000 barrels of oil daily from Venezuela. Much of the demand comes from complex refiners on the Gulf Coast that use the crude to make high-margin products like diesel.

Reporting by Marianna Parraga in Mexico City and Corina Pons in Caracas; additional reporting by Brian Ellsworth in Caracas, Gary McWilliams and Laila Kearney in Houston, and Luc Cohen in Bogota, Editing by Rosalba O'Brien

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