Exclusive-U.S. oil refiner Citgo Petroleum readies new board shakeup

By Marianna Parraga

HOUSTON (Reuters) - Venezuela-owned Citgo Petroleum is preparing to name two of its executives as new members to its board of directors, to help steer the company during upcoming negotiations between its parent boards and creditors, people familiar with the matter told Reuters.

Citgo's directors will work closely with the supervisory boards that are setting the table to begin talks with creditors who want to break up the company through an auction process that is backed by a U.S court. The parent boards this month approached U.S. officials seeking to extend Washington's protection over the company while they pursue talks to leave it intact.

Citgo Chief Executive Carlos Jorda is expected to rejoin the board after a four-month hiatus. The company's top legal and government affairs official, Jack Lynch, also will take a board seat, the people said. Lynch is a former BP (NYSE:BP) executive who joined the refiner two years ago.

Even though they are not expected to directly participate in the talks with creditors, the Citgo directors would bring necessary operating and legal know-how to greenlight any negotiation decision, the people said.

Controlled since 2019 by boards appointed by Venezuelan political leader Juan Guaido, Citgo has struggled to recruit and retain board members and top executives. The company split with parent Petroleos de Venezuela after the U.S. sanctioned the state-run oil firm.

The company plans to announce board changes along with is quarterly results in mid-November, a Citgo spokesperson confirmed. The person did not elaborate on the executives to be added.

PDVSA did not reply to a request for comment.

Citgo's current five-member board of directors, largely composed of members of Venezuela's opposition parties, was overhauled in June. CEO Jorda, who had been on two supervisory boards, was replaced by the politically connected sons of former PDVSA executives.

Citgo's operating chief Edgar Rincon was also withdrawn from Citgo Holding's board as part of the June shakeup.

The company is under siege on several fronts. Venezuela President Nicolas Maduro wants to regain control of Citgo under any reconciliation while the U.S. is investigating bribery allegations against former Citgo managers. Profits have suffered after it lost access to Venezuelan crude. It earned $3 million last quarter after five consecutive quarterly losses.

"A portion of the Venezuelan opposition, along with other countries, have stolen international assets," said Venezuela's deputy Comptroller General, Jhosnel Peraza, on Twitter (NYSE:TWTR) this week.

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Citgo has revamped management over the last two years. This month, the firm named a new vice president of health, safety and environment and in August appointed a former BP executive as general counsel. Another former BP executive was named chief ethics and compliance officer in April. In October 2020, John Zuklic was named finance chief.

Along with the two directors, Citgo is expected to name a new treasurer to replace Gina Coon, who retired earlier this year, the sources said.