Player Briefing: CITGO

CITGO is not a country but an international energy corporation. It deals in oil and petroleum products, lays pipelines and sells energy in world markets. It does not have the same political power as a state, but it has considerable economic power. It represents the many multinational corporations that today control most of the world’s wealth.

History: CITGO was founded in the early 1900s as the Cities Service Company. In 1931, it built the first long-distance pipeline in the US. In 1965 it adopted the name CITGO and began operating a chain of gas stations around the US. In the 1990s, it was acquired by Petroleos de Venezuela, the national oil company of Venezuela. Today, it is pursuing a diverse range of economic activities throughout the hemisphere. It is based in Tulsa, Oklahoma. It currently drills for oil in Venezuela, Colombia and Argentina, and it sells oil and petroleum products throughout the region. The US is its biggest market.

Policy Options: CITGO is concerned with expanding production, increasing sales and protecting its assets from international instability.

Avoid nationalization (government takeover) of oil facilities in Venezuela. Currently, CITGO is owned by a subsidiary of the Venezuelan oil company PDVSA. Under this arrangement, CITGO operates as a publicly traded company that shares facilities with its owners. PDVSA and its subsidiaries are allowed to make their own operating decisions in association with the Venezuelan Oil Ministry, which is traditionally allowed to operate with little interference from the chief executive. Now, President Chavez wants to prosecute PDVSA workers and union members for participating in a strike against him a few months ago. This could undermine PDVSA’s traditional independence and endanger CITGO assets, so the energy company would like to negotiate a settlement with Chavez that prevents a total takeover.