This NY Times article reports on the concern in Houston business circles about Houston-based Citgo Petroleum Corp.’s status as the political football of choice for Hugo Ch·vez‘s Venezuelan government, which has controlled Citgo since government-owned PetrÛleos de Venezuela acquired a controlling interest in the company in 1990.
Basically, Mr. Ch·vez and his government have promoted popular sentiment in Venezuela against Citgo’s links to the United States while, at the same time, taking actions that indicate that the government is going to exercise greater control over the company. Citgo brands its name to over 14,000 independently owned gas stations in the U.S. and generates about 15 percent of the U.S. oil refining output.
About a month ago, Ch·vez fired Citgo’s chief executive Luis MarÌn and replaced him with Felix RodrÌguez, who is a senior executive at PetrÛleos de Venezuela and a political hack for Mr. Ch·vez. Then, last week, PetrÛleos de Venezuela purged the entire Citgo board of directors and replaced them with another group of Mr. Ch·vez’s political supporters.
Although the Times article tends to view the Venezuelan government’s control of Citgo as perilous to the U.S. energy market, I’m not buying it. Frankly, it is far more likely that Mr. Ch·vez and his government will make bad decisions regarding Citgo, which will present opportunities for its competitors.