The ongoing power struggle in Venezuela has extended to a row over who is managing its state oil firm PDVSA and its key asset, U.S. refiner Citgo Petroleum—and this could be decided by asking a judge in Delaware who the legitimate president of Venezuela is.
Last week, U.S.-backed opposition leader Juan Guaido appointed new directors at the two companies in a challenge to Nicolas Maduro and in an effort to take control over Venezuela’s oil assets—pretty much the only assets that generate hard currency for the struggling Latin American country sitting on top of the world’s largest crude oil reserves.
Citgo’s previous directors appointed by Maduro remain the management of the U.S. refiner at least on paper, but the new Guaido-appointed board held a meeting on Thursday and is set to pick a new chief executive officer.
According to Bloomberg’s Jef Feeley and Bob Van Voris, it is likely that Maduro will challenge the new managers’ appointments, and this legal quagmire could end up in a court in the U.S. where Citgo is incorporated. Citgo’s parent company PDV Holding Inc is incorporated in Delaware and the ultimate shareholder is PDVSA—the state-owned firm—hence, the president of Venezuela.
Under Delaware law, Citgo is controlled by the board appointed by Maduro. Should Guaido seek to have Delaware recognize his appointees, he has to file a so-called corporate consent to Citgo’s registered agent and argue that he is the president of Venezuela, therefore, the ultimate controlling holder of PDVSA and Citgo, according to Bloomberg.
If Maduro were to challenge that, he could argue that he is the legitimate president of Venezuela.
So the issue of who is in control of Citgo could end up in a Delaware court and a Delaware judge could be asked to decide who the legitimate president of Venezuela is. Related: Cracks Begin To Form In Saudi-Russian Alliance
If it were as simple as who is president of Venezuela under U.S. law, the issue would be easy—under Article II of the Constitution, the President has the authority to recognize, or not, foreign governments. U.S. President Donald Trump has recognized Guaido as the legitimate president of Venezuela.
The U.S. judge, if asked, could also refuse to rule on such an issue because it is political, according to Bloomberg.
None of the two Venezuelan sides has filed challenges in a court to rule who controls the country’s oil assets, Bloomberg notes.
However, Venezuela’s Supreme Tribunal of Justice, the country’s pro-Maduro Supreme Court, last week ordered legal action against individuals that Guaido announced as the new board members for PDVSA and Citgo.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Oil To Rise As U.S., China Outline Trade Deal
- European Oil Demand Is Shockingly Weak
- An Underestimated Niche In Oil & Gas