Venezuela needs to extract its oil much more than what it needs Citgo.

Sir, Colby Smith and Gideon Long report that “Venezuela has long been fearful of missing a payment on Citgo’s debt — the country’s only bond not yet in default — since it could mean losing control of Citgo the jewel in the crown of PDVSA’s foreign assets” “Venezuela sanctions leave refiner’s future in doubt” August 13.

Let us be clear, in terms of helping Venezuelan’s being able to eat and buy medicines, which is what they most need right now, it is not Citgo that is worth the most, it is what it can extract in oil and sell in the markets, because that’s where the real money is. Moreover, if creditors would lay their hands on Citgo, they would most certainly love to continue refining Venezuelan oil.

Sir, what’s the worth of Citgo if Venezuela does not sell to it its oil in very favorable conditions? If I was a creditor that had my possibilities to collect based on Citgo, I would be very nervous about hearing a “Hear it is, take it!” 

And that might be why they so anxiously try to convince Juan Guaidó that he can´t afford to lose it. Personally I would, as I have many times said say “good riddance”. 

Why on earth are government bureaucrats running a normally very low margin’s refinery operation?

Sir, in 2000 I ended an interview in the Daily Journal in Caracas with: “I still can't understand the economic reasons for having bought and kept Citgo. There is evidence in the reports that it's being subsidized by PDVSA. And, for those who argue so much in favor of privatizing PDVSA, I challenge them to first make an IPO for Citgo, subject to their obligation to purchase oil products at market prices."

So, legitimate President Guaidó, don’t ever think of paying $913, in late October, to holders of a bond maturing in 2020 issued by PDVSA, which is backed by a majority stake in Citgo.

@PerKurowski

When compared to Venezuela’s oil reserves, Citgo is nothing.

Sir, Colby Smith refers to Citgo as “the last-remaining crown jewel of Venezuela” “Stakes rise for Venezuelan assets stateside” Alphaville May 17.

Frankly, Venezuela has what has been reported as the largest oil reserves in the world. What is Citgo compared to that? Absolutely nothing!

What’s valuable for Venezuela is its oil, but the value of it has been greatly diminished, first and foremost because the government handles the redistribution of all net oil revenues, but then also because way too many have wanted to profit from doing something with our oil, for instance refining it, abroad.

In 2000, in an interview in the Daily Journal of Caracas I said:

“Until someone convinces me of something different, I insist that anything else the Venezuelan state tries to do with oil, means a loss or a net reduction of the benefits brought by the first phases of the operation, [its extraction].

Because of that and the fact that I have seen the corporation's reports, I still can't understand the economic reasons for having bought and kept Citgo. There is evidence in the reports that it is being subsidized by PDVSA. 

And, for those who argue so much in favor of privatizing PDVSA, I challenge them to make an IPO for Citgo, subject to their obligation to purchase oil products at market prices."

Sir, we have millions of our young growing up undernourished and still some try to hang on to a very high hanging fruit as Citgo, so my current tweet sized proposal is: 

So that Venezuelans can eat quickly, hand over Pdvsa (and Citgo) to Venezuela’s creditors quickly, to see if they can put all that junk to work quickly, to see if they can collect something quickly, and pay us Venezuelans, not the bandits, our oil royalties quickly.

The Iraq Study Group established by the U.S. Congress, reported in 2006 the following: "There are proposals to redistribute a portion of oil revenues directly to the population on a per capita basis. These proposals have the potential to give all Iraqi citizens a stake in the nation's chief natural resource." Sadly it came to nothing

Sir, if that were to be implemented in Venezuela, then Venezuelans would live in a truly independent nation, and not just in somebody else’s business.

PS. A couple of years ago I gave a speech to transfer price specialists in Washington recounting the very curious thing of Venezuela´s state PDVSA that sold petrol at lower than market prices to their then recently acquired refinery subsidiary in the US, CITGO, paying unnecessary taxes to another than their own tax man, probably just because they wanted to show the Venezuela public that Citgo was such a good investment. Crazy? Yes of course, but that´s life in a tropical country.

@PerKurowski