Citgo Showing Signs of Turmoil

HOUSTON -- Ever since Hugo Chåvez was elected president of Venezuela in 1998, the American executives at Citgo Petroleum, the large refiner and gasoline marketer that is owned by Petróleos de Venezuela and based here, have worried about their future under the mercurial leader.

According to The New York Times, their fears may be coming true. Current and former Citgo executives have revealed in recent weeks that Chávez has shaken to the core the company's once-staid culture, leaving Citgo in a state bordering on disarray. Almost every high-ranking executive has resigned over the past two years, including the refining chief, chief financial officer, head auditor and marketing director.

Geoff Reid, a former assistant treasurer, said in an interview with the Times that he had left in part because it had become hard to track the company's cash flow and he had become concerned about his "personal liability" in approving Citgo's financial statements.

All of the upheaval means that Citgo has been slow to seize on growth opportunities in the oil-refining industry, which is experiencing its strongest returns in more than two decades. Citgo's six refineries pump out about 900,000 barrels a day of refined products, and the company sells gasoline at more than 13,000 Citgo-branded service stations, making it the fourth-largest gasoline retailer in the country. But on Sunday, the Venezuelan oil minister, Rafael Ramírez, said the government planned to sell two Citgo refineries in the United States, possibly signaling Chávez's intent to disassemble the American subsidiary, which has existed since 1910.

According to the Times, Citgo's turmoil has been masked by recent record oil prices and some of the fattest refining profit margins in history. Citgo's net income increased 42 percent to $625 million last year on revenue of $32.3 billion, up from $25.5 billion in 2003. While Citgo does not have publicly traded shares, the company sells its bonds and files financial statements in the United States.