CARACAS/PUNTO FIJO, Venezuela (Reuters) - Venezuela’s opposition-controlled National Assembly on Tuesday allowed a parallel board of directors of state-run oil company PDVSA to negotiate foreign debt ahead of a looming payment deadline that could put its crown jewel overseas asset, U.S. refiner Citgo, at risk.
The ad hoc board, which the Assembly on Tuesday expanded to nine members from five, is part an effort by opposition leaders who have disavowed the government of President Nicolas Maduro to control PDVSA’s overseas assets. Maduro’s ruling Socialist Party continues to control the company’s day-to-day operations.
The move will allow the board to decide whether or not to make a $71 million interest payment due April 27 on PDVSA’s 2020 bond, which is backed by a 49 percent stake in Citgo, said opposition lawmaker Elias Matta, the head of the Assembly’s energy commission.
“They will evaluate if they are going to pay the bonds. That is now their decision,” Matta said in a telephone interview, adding that the board would have to inform the Assembly should it decide to pay. “We will do everything we have to do to protect the republic’s assets.”
Failure to pay the bond could allow bondholders to seize shares in Citgo as compensation. PDVSA has a 30-day grace period following the April 27 deadline to make the payment.
The board’s new head will be former PDVSA executive Luis Pacheco, Matta said.
National Assembly leader Juan Guaido, who invoked the country’s constitution to assume an interim presidency in January, appointed the ad-hoc board in February to protect PDVSA’s assets from “continued destruction” by Maduro.
Guaido, who is recognized by most Western countries including the United States, as Venezuela’s rightful leader, argues Maduro’s May 2018 re-election was a sham.
Maduro, who retains control of the military and basic operations of government, calls Guaido a puppet of the United States and accuses the opposition of trying to “steal” Citgo.
Neither PDVSA nor Venezuela’s oil or information ministries responded to requests for comment.
Oil production is the lifeblood of Venezuela’s economy, but its crude exports have tumbled sharply in recent years as the country suffers a hyperinflation collapse.
In the past month, that has been compounded by a wave of nationwide blackouts, which have led the main oil export terminal, Jose, and the country’s four crucial crude upgraders to halt operations in March.
Two of those upgraders - which convert extra-heavy crude from the country’s Orinoco Belt into exportable grades - have restarted, according to a document seen by Reuters on Tuesday.
The Petrocedeno upgrader, a joint venture between PDVSA, France’s Total SA and Norway’s Equinor ASA, and the Petropiar joint venture with U.S. Chevron Corp both restarted. The Petromonagas upgrader, a joint venture with Russia’s Rosneft, along with PDVSA’s Petrosanfelix upgrader, remained halted.
The upgraders, together with the Petrosinovensa mixing facility, were set to produce 298,000 barrels of upgraded crude on Tuesday. That was still below the 326,000 barrels that PDVSA expected them to produce, according to the document.
The document also shows that PDVSA has a deficit of 70,700 barrels of naphtha, a light oil product that it uses to dilute its extra-heavy crude into an exportable grade when the upgraders are out of service. Most of Venezuela’s naphtha is imported.
Reporting by Luc Cohen in Caracas and Mircely Guanipa in Punto Fijo; Additional reporting by Corina Pons in Caracas and Marianna Parraga in Mexico City; Editing by Jonathan Oatis, Tom Brown and Dan Grebler