Driverless delivery startup Nuro gets $940 million SoftBank investment

(Reuters) – Autonomous technology startup Nuro said on Monday it raised $940 million from SoftBank Group Corp, which valued the Silicon Valley-based company at $2.7 billion.

Nuro was co-founded in 2016 by two former engineers of Google’s self-driving car project, Dave Ferguson and Jiajun Zhu.

The funding by SoftBank came through its $100-billion Vision Fund, which usually picks up big stakes in fast-growing technology companies.

Last year, Nuro launched a self-driving delivery vehicle to run errands from picking up groceries to delivering dinner, and partnered with U.S. supermarket chain Kroger co to extend its services.

The firm, which largely operates in the San Francisco Bay Area, said it will use the funds to expand its delivery service to new areas, add new partners, expand its fleet and grow its team.

Nuro has raised more than $1 billion from investors, including Greylock Partners and Gaorong Capital, which had participated in its Series A funding round.

Reporting by Munsif Vengattil and Aparajita Saxena in Bengaluru; Editing by Arun Koyyur

Qatar revamps investment strategy after Kushner building bailout

LONDON/NEW YORK/DUBAI (Reuters) – When news emerged that Qatar may have unwittingly helped bail out a New York skyscraper owned by the family of Jared Kushner, Donald Trump’s son-in-law, eyebrows were raised in Doha.

Kushner, a senior White House adviser, was a close ally of Saudi Crown Prince Mohammed bin Salman – a key architect of a regional boycott against Qatar, which Riyadh accuses of sponsoring terrorism. Doha denies the charge.

Brookfield, a global property investor in which the Qatari government has placed investments, struck a deal last year that rescued the Kushner Companies’ 666 Fifth Avenue tower in Manhattan from financial straits.

The bailout, in which Doha played no part and first learned about in the media, has prompted a rethink of how the gas-rich kingdom invests money abroad via its giant sovereign wealth fund, two sources with knowledge of the matter told Reuters.

The country has decided that the Qatar Investment Authority (QIA) will aim to avoid putting money in funds or other investment vehicles it does not have full control over, according to the sources, who are familiar with the QIA’s strategy.

“Qatar started looking into how its name got involved into the deal and found out it was because of a fund it co-owned,” said one of the sources. “So QIA ultimately triggered a strategy revamp.”

The QIA declined to comment.

Canada’s Brookfield Asset Management Inc bailed out 666 Fifth Avenue via its real estate unit Brookfield Property Partners, in which the QIA acquired a 9 percent stake five years ago. Both parent and unit declined to comment.

The QIA’s strategic shift was made late last year, according to the sources. It offers a rare insight into the thinking of one of the world’s most secretive sovereign wealth funds.

The revamp could have significant implications for the global investment scene because the QIA is one of the world’s largest state investors, with more than $320 billion under management.

The wealth fund has poured money into the West over the past decade, including rescuing British and Swiss banks during the 2008 financial crisis and investing in landmarks like New York’s Plaza Hotel and the Savoy Hotel and Harrods store in London.

QATARI BOYCOTT

Kushner was chief executive of Kushner Companies when it acquired 666 Fifth Avenue in 2007 for $1.8 billion, a record at the time for a Manhattan office building. It has been a drag on his family’s real estate company ever since.

The debt-laden skyscraper was bailed out by Brookfield last August, when it took a 99-year lease on the property, paying the rent for 99 years upfront. Financial terms were not disclosed.

The QIA bought a 9 percent stake in Brookfield Property Partners, which is known as BPY and is listed in Toronto and New York, for $1.8 billion in 2014.

BPY has about $87 billion in assets, part of more than $330 billion managed by its parent Brookfield. The stake purchase by QIA was in line with its strategy to boost investments in prime U.S. property. The investment gave QIA no seat on the board of BPY.

The Qatari wealth fund was not involved in the 666 Fifth Avenue deal, a source close to Brookfield Asset Management told Reuters. There was no requirement for Brookfield to inform the QIA beforehand.

The rescue rankled with Doha, according to the two sources familiar with the QIA’s strategy, because Kushner – married to U.S. President Trump’s daughter Ivanka – had long been one of the key supporters in Washington of the Saudi crown prince, who is the king’s favorite son and heir to the throne.

Prince Mohammed was a prime mover in leading regional states to severing links with its neighbor Qatar and embargoing the small nation since mid-2017. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain accuse Qatar of sponsoring terrorism. Doha denies the allegation and says the other countries simply want to strip it of its sovereignty.

“There is no upside in investing through funds for someone like QIA. Qatar wants full visibility into where its money goes,” said the second source familiar with the QIA’s strategy.

He added that one of the reasons for Doha’s concerns about the deal was that it might have been seen as an attempt by Qatar to influence the Trump administration, which was not the case.

The QIA will not wind down existing investments with Brookfield or others, but will rather no longer invest in similar deals, according to the two sources.

The source close to Brookfield said relations with the QIA were still strong.

STILL GOING BIG

The QIA’s strategic revamp also followed a reshuffle at the top of the fund last November when its long-serving chief, Sheikh Abdullah bin Mohamed bin Saud al-Thani, was replaced by its former head of risk management, Mansour Ibrahim al-Mahmoud. Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani was named QIA chairman.

Qatar, whose wealth comes from the world’s largest exports of liquefied gas, does not provide data on how much money it places with external fund managers.

“What we have seen lately is that it has have not been placing much,” said a Western fund manager who regularly sources money from wealth funds. “Either they are investing themselves or they are just sitting on a lot of cash.”

The Qatar shift in its approach reflects a wider trend among sovereign wealth funds to reduce reliance on external investment managers, in an attempt to keep tighter control over their money.

The Abu Dhabi Investment Authority, for example, said last year that 55 percent of its assets were managed by external managers in 2017, down from 60 percent the year before.

Yet, even if the QIA is being more cautious in its choice of investment vehicles, there is little indication that its appetite for big international acquisitions has diminished.

In December, new QIA chief Mahmoud told Reuters the fund was focusing on “classic” investments in the West such as real estate and financial institutions, and would also accelerate investment in technology and healthcare.

“The instructions from the top are to go out and do big deals,” said a Western banker who has held talks with Qatari officials.

He said QIA’s dealmaking had not stopped even during the height of the Gulf embargo, which initially forced the fund to put in about half of the $43 billion injected by public-sector firms into Qatari banks to mitigate the impact of outflows.

With oil and gas prices growing over the past two years, Qatar has not departed from what it is best known for – snapping up big-names properties.

In 2017, QIA pledged to ramp up its investments in Britain to 35 billion pounds ($45 billion) from 30 billion. Since then, it has spent about 1.7 billion pounds on real estate and another 1.1 billion on infrastructure in the country.

In recent months, Qatar has bought New York’s Plaza and London’s Grosvenor House hotels.

Additional reporting by Eric Knecht; Writing by Dmitry Zhdannikov; Editing by Pravin Char

Wall Street gains as U.S.-China trade talks resume

(Reuters) – U.S. stocks rose on Monday, led by industrial companies, as the United States and China began their latest round of trade talks to hammer out a deal before the looming March deadline.

China struck an upbeat note on the talks, while White House senior counselor Kellyanne Conway also expressed confidence of a possible deal.

Boeing Inc, the largest U.S. exporter to China, and Caterpillar Inc both gained 1 percent and pushed the trade-sensitive industrial sector 0.71 percent higher.

“These trade talks are being viewed as a positive,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“There is still a lot of uncertainty, but there’s this pattern of markets embracing good news a little bit more than bad news.”

The latest talks come against the backdrop of last month’s discussions ending without a deal and the top U.S. negotiator declaring that a lot more work needed to be done.

“The market is reacting to shifting news but there won’t be a significant move until we get a resolution to trade,” Brown said.

Also on investors’ watchlist is the border security funding talks, which collapsed on Sunday after Democratic and Republican lawmakers clashed over immigrant detention policy. A special negotiating panel is aiming to reach a deal by Monday ahead of a Friday deadline to avert another government shutdown.

Trade uncertainty and worries of a global economic slowdown capped gains on the SP 500, which ended last week flat. Still the benchmark index is nearly 16 percent above its December lows, helped in part by a dovish Federal Reserve and largely upbeat earnings reports.

Of the SP 500 companies that have reported fourth-quarter earnings, 71.2 percent have topped estimates, according to IBES data from Refinitiv. But analysts’ estimates for first-quarter earnings have turned negative for the first time since 2016.

At 9:39 a.m. ET, the Dow Jones Industrial Average was up 78.62 points, or 0.31 percent, at 25,184.95. The SP 500 was up 9.43 points, or 0.35 percent, at 2,717.31 and the Nasdaq Composite was up 37.41 points, or 0.51 percent, at 7,335.61.

The energy sector fell 0.54 percent and was the only major SP sector to drop, as oil prices slipped.

The heavyweight FAANG stocks – Facebook Inc, Apple Inc, Alphabet Inc, Netflix Inc and Amazon.com Inc – rose between 0.4 percent and 1.4 percent.

Electronics Arts Inc gained 8.8 percent after analysts were upbeat about a strong start to the videogame publisher’s newly launched rival to “Fortnite”.

Advancing issues outnumbered decliners by a 1.78-to-1 ratio on the NYSE and by a 1.99-to-1 ratio on the Nasdaq.

The SP index recorded 15 new 52-week highs and one new lows, while the Nasdaq recorded 34 new highs and six new lows.

Reporting by Amy Caren Daniel and Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila

IKEA accelerates services drive as competition stiffens

STOCKHOLM/NEW YORK (Reuters) – Jessica Reznik likes IKEA’s prices but not do-it-yourself. So when the Swedish furniture giant said a handyman on odd-jobs site TaskRabbit could assemble her new dresser and nightstand in her New York apartment, she jumped at the offer.

Reznik, a 24-year-old teacher, is just the kind of busy millennial IKEA hoped it would attract when it bought TaskRabbit www.taskrabbit.com in September 2017 as part of a drive to offer a range of services complementing its trademark flat-pack furniture.

The focus on services by the world’s biggest furniture retailer is a major strategic shift it has been forced to adopt to stay in the game as waves of new competitors in an increasingly online world erode its dominance.

It seems to be working. In the first readout on TaskRabbit’s activity since IKEA bought it, executives told Reuters the number of jobs done by TaskRabbit handymen had more than doubled and 10 percent of the tasks were furniture assembly, up from 2 percent before.

Jesper Brodin, chief executive of Ingka Group, which owns most IKEA stores, said TaskRabbit was expanding into interior design and looking at services such as furniture repair to give IKEA an edge, while TaskRabbit’s customer data could help IKEA come up with new ideas for furniture.

“As this community grows its not only about fixing one or two things but actually to add professionalism in interior decoration, into ‘life at home’ practicalities,” Brodin said at TaskRabbit’s San Francisco headquarters.

“TaskRabbit is a super interesting business case because it is scalable, not only geographically but also into services at home,” he said.

Using TaskRabbit to bundle same-day delivery and assembly for IKEA is another service being rolled out, TaskRabbit chief executive Stacy Brown-Philpot said.

AFTER-MARKET BATTLE

Winning the battle for online shoppers is crucial for IKEA. While online furniture retailing was relatively slow to take off, the market is now being flooded and the battle is increasingly in after-market services.

The United States is IKEA’s second-biggest market behind Germany with 14 percent of its sales

GlobalData Retail analyst Neil Saunders put the overall U.S. home furnishing market at $282 billion in 2017. But he said IKEA’s share was 2 percent, down from 2.2 percent in 2014 and well below Germany, where it has as 12 percent share.

Pure online furniture retailers such as Germany’s Home24, Britain’s MADE and Wayfair in the United States have been growing rapidly, online generalists such as Amazon are pushing furniture while some hypermarkets are branching out into home furnishings.

What’s more, Walmart and Wayfair have also started offering inexpensive assembly services in the United States through TaskRabbit rival Handy www.handy.com.

“Anyone who sells furniture will have a delivery service,” Kantar Retail analyst Ray Gaul said. “The difference will be that instead of having just a delivery service, IKEA are trying to give some assistance in designing your space, and that’s where TaskRabbit can be helpful.”

IKEA, which had global sales of 39 billion euros ($44 billion) last year, made its name selling inexpensive furniture mainly to people willing to travel to its vast stores, lug their merchandise home and assemble it themselves.

Now, more shoppers prefer the convenience of buying big-ticket items online and getting products delivered, assembled and installed. In Reznik’s case, she paid $81 to have her furniture built, with TaskRabbit taking a 15 percent cut.

Since IKEA’s acquisition, the first in its 76-year history, TaskRabbit has expanded to all 48 U.S. cities with IKEA stores, up from 41 before. In Britain, it has moved beyond London to 11 more cities and it launched in Toronto, Canada, in September.

FEEDBACK LOOP

Since it was founded in 2008, TaskRabbit says its vetted “taskers” have assembled 545,000 pieces of furniture, moved over 340,000 households and mounted more than 190,000 TVs – though it didn’t give a breakdown for before and after the IKEA deal.

“We are convinced this is a way to access new customers in our cities,” said Brodin, who aims to take TaskRabbit to more countries. “The convenience customer today has so many more choices, and they are used to getting a quick answer.”

But having TaskRabbit freelancers associated with the IKEA brand also brings new risks, even though they are vetted.

“You don’t know if they are a good person or not. And, like it or not, it’s associated with your brand. So if they steal something, or worse, it’s back on IKEA,” Kantar’s Gaul said.

Brown-Philpot attributed much of TaskRabbit’s growth since the deal to links on IKEA’s website.

“Once we closed the acquisition, yes, the branding happened: there was co-branding in the store, there’s opportunity for people to see TaskRabbit in the catalog, we’ve been on a couple of commercials. But what’s really happened is the seamlessness, the integration,” she said.

Besides TaskRabbit, IKEA is rolling out accessible inner-city stores with staff on hand to advise on planning, as well as apps and digital tools to help customers tailor living spaces.

Slideshow (15 Images)

IKEA has offered assembly across its markets for more than four years, mostly through service partners. It has also entered partnerships with Airtasker www.airtasker.com in Australia and UrbanClap www.urbanclap.com in India.

But TaskRabbit is the only platform it has bought, and executives say that brings IKEA another benefit: it has access to TaskRabbit’s customer data.

“The knowledge of the taskers and their interaction will be some sort of asset for us in the future for feedback for product development,” said Brodin. “That was not part of the strategy but that’s something we are going to explore.”

Reporting by Anna Ringstrom in Stockholm, Melissa Fares in New York and Heather Somerville in San Francisco; editing by David Clarke

Apple iPhone sales in China fell by a fifth in fourth quarter: IDC

(Reuters) – Apple Inc iPhone sales in China fell 20 percent year-on-year in the fourth quarter of 2018, while sales for smartphones made by home-grown rival Huawei soared by 23 percent, data from industry research firm IDC showed on Monday.

The report is the first to put a firm number on the scale of a recent decline in Apple’s fortunes in the world’s second largest economy, after Chief Executive Officer Tim Cook pointed to China as a big factor in a rare cut in the company’s quarterly sales forecast last month.

Apple no longer breaks out detailed numbers on iPhone shipments in its quarterly results, meaning that surveys and channel checks by the likes of IDC are often the clearest indicator of shifts in sales.

The figures in the report showed a 19.9 percent fall in Apple’s smartphone shipments in the final quarter of 2018, while Huawei’s grew 23.3 percent. That reduced Apple’s market share to 11.5 percent from 12.9 percent a year earlier, the report said.

“Besides regular performance upgrades in 2018 and small changes to the exterior, there has not been any major innovation that supports users to continue to change their phones at the greatly increased price,” the report said.

“The severe macro environment in China and the assault of domestic brands’ innovative products have also been reasons for Apple’s continued decline.”

A separate report from another common industry source, Hong Kong-based Counterpoint, earlier this month confirmed a similar sharp fall in sales in India – another big emerging market where Apple is struggling.

Counterpoint said iPhone sales in the fourth quarter, which includes India’s electronics sales-heavy Diwali festival, fell 25 percent on the year, reducing total sales in 2018 to 1.7 million units from 3.2 million a year earlier.

Reporting by Brenda Goh in Shanghai, Sonam Rai in Bengaluru and Sankalp Phartiyal in Mumbai; Writing by Patrick Graham; Editing by Bernard Orr

Credit Suisse investment bank won’t shrink more: chairman

ZURICH (Reuters) – Credit Suisse’s investment banking operation has been scaled back enough, Chairman Urs Rohner was quoted saying in a newspaper interview, underscoring the number two Swiss bank’s commitment to the business.

Asked by Schweiz am Wochenende if the investment bank was tying up too much capital, Rohner said: “No, we see 60 billion Swiss francs ($60 billion) in risk-weighted assets as a reasonable size for our trading business. You can hardly run this business with less.”

Like bigger rival UBS, Credit Suisse has cut investment banking to focus on wealth management, reducing the financial impact when markets turn volatile.

Rohner, who said Credit Suisse’s merger advisory business made it the only European bank able to match up against U.S. rivals, also played down speculation that the bank’s low share price could make it a takeover target. The stock fell more than a third last year and is down nearly 10 percent this year.

“Banks operate in a very regulated environment. Hostile takeovers are almost ruled out these days,” he said.

Asked whether the bank could have foreigners as both chairman and chief executive, the Swiss manager said: “In theory yes, in practice hardly.

“Our name is Credit Suisse, we have 1.5 million customers here, so it makes sense that one of the two top positions is held by someone who speaks our language and knows the country and its culture. The chairman in particular must have good contacts in Swiss politics.”

French-Ivorian Tidjane Thiam is chief executive and Rohner said he hoped and expected this to still be the case when Rohner is due to retire in 2021.

“It is very important or us to have a strong leader who has shaped and implemented our restructuring,” he said.

Rohner added that nearly everyone wanted an end to negative Swiss interest rates but it did no good to moan about them. “It is to be assumed from today’s perspective that we will have very, very low rates for some time still.”

Reporting by Michael Shields; Editing by David Holmes

U.S. fund managers brace for consumer slowdown

(Reuters) – With expectations for slowing growth escalating, U.S. fund managers are selectively avoiding stocks in consumer companies as lofty valuations, concerns about declining earnings estimates, and consumer confidence keep them on guard.

Low U.S. unemployment and rising wages should point to a healthy consumer, but worries about global growth, domestic U.S. politics and a U.S.-China trade war have been wearing on consumer and investor moods.

Wall Street expects fourth-quarter earnings growth of 14.7 percent for the SP 500’s consumer discretionary index – below the 17.8 percent consensus from October at the beginning of the fourth quarter, according to data from Refinitiv as of Friday morning.

And for the first quarter, analysts expect discretionary earnings to fall 1.7 percent, compared with expectations for 6 percent growth on Oct. 1.

For consumer staples, fourth-quarter earnings are expected to grow 4.2 percent, down from the 6.7 percent consensus in October, with 0.7 percent growth expected for the first quarter.

In comparison, the broader SP benchmark is expected to report fourth-quarter earnings growth of 16.8 percent and decline 0.1 percent in the first quarter.

“Our thoughts on the global consumer is that the marginal data points coming in are more negative than positive,” said Eric Freedman, Chief Investment Officer at U.S. Bank Wealth Management in Minneapolis. His firm is “market weight to slightly underweight” on consumer discretionary while it views consumer staples valuations as “fair to slightly over valued.”

U.S consumer confidence fell to a 1-1/2 year-low in January as a partial shutdown of the government and financial markets turmoil left households nervous, according to a Conference Board survey.

Shawn Kravetz, Esplanade Capital LLC’s chief investment officer, said while the “consumer remains generally robust, most people have had something in their life in the past few months that has given them pause.”

“For the wealthy it was watching the stock market go down 15 percent in the fourth quarter,” Kravetz said. “For government workers, it was weeks of no cash flow and uncertainty. For many it was the uncertainty of the shutdown and what the secondary effects might be to them directly, to their jobs or businesses, or the economy at large … everyone was touched directly or indirectly. That didn’t pop the bubble but certainly let a little air out.”

Like other investors, Kravetz is largely avoiding consumer stocks because of their valuations.

The consumer discretionary index trades at roughly 19.8 times forward earnings estimates compared with 17.3 for consumer staples and a 15.8 multiple for the broader SP, according to Refinitiv data.

“You’re paying more for less growth,” said Burns McKinney, a portfolio manager at Allianz Global Investors in Dallas. His firm holds stocks in consumer companies including Target Corp and General Motors but is underweight the broader discretionary and staples sectors.

Companies that have yet to report their earnings include Coca-Cola Co, PepsiCo Inc, Newell Brands Inc, and Walmart Inc, which fit into the staples category, while discretionary companies that have yet to report include retailers such as Home Depot Inc, Macy’s Inc, Gap Inc and Target.

“The big retailers like Walmart are fairly valued with solid expectations but also with some risks,” Kravetz said. “The brands like Coca-Cola and Pepsi are mostly near their highs as safety in storms but with enough risks to keep us away. The stores like Macy’s and Gap are challenged.”

Jharonne Martis, director of consumer research at Refinitiv, said retail growth is still healthy, but because growth was “significantly stronger” earlier in 2018, “some of the stocks could be punished” when retailers report earnings.

“We’re already seeing that consumer confidence has lowered and analysts have been lowering expectations for 2019,” said Martis.

So far, 71 percent of consumer discretionary firms have beat Wall Street’s fourth-quarter earnings expectations, with more than half of the results already released. About 64 percent of staples companies have beat estimates, with reports out from two-thirds of the sector, according to data from Refinitiv.

A major challenge to first-quarter numbers for consumer companies was the 35-day partial U.S. government shutdown, when hundreds of thousands of federal workers went without paychecks.

Because of the shutdown, government data releases were delayed. The U.S. Commerce Department’s Census Bureau announced earlier this week that it would release December’s retail sales report on Feb. 14.

In a recent Reuters poll a majority of economists saw the shutdown having a significant impact on first quarter gross domestic product growth, with the median expectation for a 0.3 percentage point trim.

On top of this, a late-2018 equity market sell-off, which sliced 19.8 percent of the SP 500 between Sept. 20 and Dec. 24, also scared consumers, according to Morgan Stanley.

Reporting by Sinéad Carew. Editing by Jennifer Ablan and Rosalba O’Brien

Marriott teams up with Kuwait Projects on St. Regis resort in Morocco

DUBAI (Reuters) – United Real Estate Co., a unit of Kuwait Projects Co, and Marriott International said in a joint statement on Saturday that they had agreed to open a resort near Marrakech.

Marriott said in October it had signed deals with partners to increase its hotels in Africa 50 percent by 2023, opening new ones in Ghana, Kenya, Morocco, South Africa and entering the market in Mozambique.

The St. Regis Marrakech, in central Morocco, should open in 2024, the joint statement published in Kuwait said, without disclosing the cost of the development.

The deal “introduces” Marriott’s St Regis brand to Marrakech, it said, adding that the resort will be owned by Morocco’s Assoufid Properties Development and developed by United Real Estate.

Reporting by Maher Chmaytelli; Editing by Alexander Smith

Exclusive: Venezuela moves to replace U.S. executives on Citgo board

(Reuters) – Venezuelan state-run oil company PDVSA is taking steps to remove at least two American executives from the board of directors of its U.S. refining subsidiary, Citgo Petroleum Corp, according to people close to the matter.

Citgo is facing unprecedented challenges to its finances and management after the U.S. government last week imposed tough sanctions on Petroleos de Venezuela [PDVSA.UL] designed to prevent oil revenue from going to leftist President Nicolas Maduro. The United States and dozens of other nations have refused to recognize Maduro, viewing his reelection last year to another six-year term as fraudulent.

Venezuela’s self-proclaimed president Juan Guaido is setting up bank accounts with U.S. help that would take income accrued by Citgo, Venezuela’s top foreign asset, to finance an interim government. Maduro has denounced Guaido as a U.S. puppet who is seeking to foment a coup.

The board of Houston-based Citgo includes at least two U.S. citizens, Art Klein and Rick Esser, as well as Venezuelans Asdrubal Chavez, Frank Gygax, Nepmar Escalona, Simon Suarez and Alejandro Escarra, according to one of the people familiar with the matter.

PDVSA and Citgo did not respond to requests for comment. Esser and Klein did not immediately reply to emails and phone calls seeking comment on their status.

It was unclear if PDVSA’s board has already approved the changes at Citgo’s board and who would replace the American executives.

Citgo also has an executive board that includes the refiner’s general managers, its corporate treasurer and the controller, and other vice presidents.

Esser was among a team of Citgo executives who met with U.S. officials last month in Washington amid efforts by Guaido and the U.S. government to appoint a new Citgo board of directors.

Citgo operates three U.S. refineries that supply about 4 percent of total U.S. fuel production and is PDVSA’s largest U.S. customer for its oil exports. Sanctions have forced Citgo and other U.S. refiners to seek crude oil supplies from other nations.

Delaware-registered Citgo operates plants in Texas, Louisiana and Illinois that are capable of processing a combined 750,000 barrels per day of oil. It distributes fuel through about 5,500 independent retail stations in 29 U.S. states.

Citgo, which has been owned by PDVSA for three decades, has not publicly detailed the composition of its current board since late 2017, when Asdrubal Chavez, a cousin of the late Venezuelan leader Hugo Chavez, was nominated by Maduro to run the business unit.

Asdrubal Chavez, Escalona and Escarra have been working from an office in the Bahamas since the U.S. sanctions were issued, according to the sources.

On Friday, Venezuelan oil minister and PDVSA President Manuel Quevedo held a meeting with his deputy ministers and directors, one of the people said. The agenda was not revealed.

Reporting by Marianna Parraga in Mexico City, Deisy Buitrago and Corina Pons in Caracas; editing by Gary McWilliams and Leslie Adler

Exclusive: Venezuela shifts oil ventures’ accounts to Russian bank

CARACAS (Reuters) – Venezuela’s state-run oil company PDVSA is telling customers of its joint ventures to deposit oil sales proceeds in an account recently opened at Russia’s Gazprombank AO, according to sources and an internal document seen by Reuters on Saturday.

PDVSA’s move comes after the United States imposed tough, new financial sanctions on Jan. 28 aimed at blocking Venezuela’s President Nicolas Maduro’s access to the country’s oil revenue.

Supporters of Venezuelan opposition leader and self-proclaimed interim president Juan Guaido said recently that a fund would be established to accept proceeds from sales of Venezuelan oil.

The United States and dozens of other countries have recognized Guaido as the nation’s legitimate head of state. Maduro has denounced Guaido as a U.S. puppet seeking to foment a coup.

PDVSA also has begun pressing its foreign partners holding stakes in joint ventures in its key Orinoco Belt producing area to formally decide whether they will continue with the projects, according to two sources with knowledge of the talks.

The joint venture partners include Norway’s Equinor ASA, U.S.-based Chevron Corp and France’s Total SA.

“We would like to make formal your knowledge of new banking instructions to make payments in U.S. dollars or euros,” wrote PDVSA’s finance vice president, Fernando De Quintal, in a letter dated Feb. 8 to the PDVSA unit that supervises its joint ventures.

Even after a first round of financial sanctions in 2017, PDVSA’s joint ventures managed to maintain bank accounts in the United States and Europe to receive proceeds from oil sales. They also used correspondent banks in the United States and Europe to shift money to PDVSA’s accounts in China.

State-run PDVSA several weeks ago informed customers of the new banking instructions and has begun moving the accounts of its joint ventures, which can export crude separately. The decision was made amid tension with some of its partners, which have withdrawn staff from Caracas since U.S. sanctions were imposed in January.

The sanctions gave U.S. oil companies working in Venezuela, including Chevron and oil service firms Halliburton Co, General Electric Co’s Baker Hughes and Schlumberger NV, a deadline to halt all operations in the South American country.

The European Union has encouraged member countries to recognize a new temporary government led by Guaido until new elections can be held. Europe also has said it could impose financial sanctions to bar Maduro from having access to oil revenue coming from the region.

Maduro has overseen an economic collapse in the oil-rich OPEC country that has left many Venezuelans malnourished and struggling to find medicine, sparking the exodus of an estimated 3 million Venezuelans.

Sanctions designed to deprive Maduro of oil revenue have left an armada of loaded oil tankers off Venezuela’s coasts that have not been discharged by PDVSA’s customers due to payment issues. The bottleneck has caused problems for PDVSA to continue producing and refining oil without imported diluents and components.

PDVSA also ordered its Petrocedeno joint venture with Equinor and Total to halt extra-heavy oil output and upgrading due to a lack of naphtha needed to make the production exportable, as the sanctions prohibit U.S. suppliers of the fuel from exporting to Venezuela.

Reporting by Marianna Parraga in Mexico City and Corina Pons in Caracas; editing by Jonathan Oatis and G Crosse