(Reuters) - Citgo Petroleum Corp’s directors are unlikely to bow to pressure this week to resume dividend payments, two sources close to the discussions said, as the refiner cannot yet help Venezuela’s interim government ease creditors’ claims against its parent PDVSA that also are threatening its assets.

FILE PHOTO: The Citgo Petroleum Corporation headquarters are pictured in Houston, Texas, U.S., February 19, 2019. REUTERS/Loren Elliott/File Photo

Citgo has long been the prized possession of state oil company PDVSA, as one of the largest U.S. refiners with a network of more than 5,000 gas stations. But the company broke away from its parent earlier this year in the wake of U.S. sanctions on Venezuela, naming new management with backing from the country’s opposition leader, Juan Guaido.

Some PDVSA creditors expect Citgo, which is set to report strong third-quarter profit on Thursday, to help pay off PDVSA debts.

If the Venezuelan Congress and the U.S Treasury were to give approval to use Citgo’s dividends to pay PDVSA’s debt, which range from arbitration claims to defaulted bonds, the Guaido-supported team could gain a negotiating tool in talks with creditors asking U.S. courts to seize Citgo’s assets.

But directors who meet this week are likely to call for reinvesting profits, the people said, citing years of underinvestment under a board led by socialist President Nicolas Maduro. The unusual battle reflects Citgo’s place as the South American nation’s foreign crown jewel.

Restricting other uses of its profit are Citgo’s debt covenants and a decree that requires the Venezuelan Congress to approve any use of Citgo repatriated profit. The refining subsidiary, which is Venezuela’s largest foreign asset, once contributed over $1 billion a year in dividends to its parent.

“Citgo will not be a source of money for Guaido’s government for at least two years,” said a person close to his team after reviewing the company’s debt covenants and earnings forecasts.

Debt covenants, which limit the refiner’s ability to declare or pay dividends until the company’s debt-to-equity ratio improves, are the main obstacles to transfer at least a portion of Citgo’s net income for covering PDVSA bond payments, the people said.

Citgo is expected to disclose strong profit in the third quarter on top of earnings in the second quarter of $122 million, its first profit after U.S. sanctions deprived it of PDVSA’s oil. Those measures drove the Houston-based refiner into the red in the first quarter as executives scrambled to replace crude once imported from Venezuela.

Internal audits and work done by the previous administration also will be discussed by Citgo and its parent’s directors, the people said, amid criticism in Venezuela over corruption accusations involving companies linked both to Maduro’s government and some opposition figures.

A Citgo spokeswoman declined to comment other than to say investors would be informed of third-quarter results on Thursday.

Another person familiar with its results said this year’s profit is not high, but the company’s increased liquidity “is helping a lot.”

U.S. sanctions gave Guaido’s team an opportunity to take control of Citgo, which he did by appointing a new board loyal to his interim government in February. The Venezuelan Congress also created an ad-hoc board over PDVSA, which operates outside of Venezuela and will meet in Houston this week.

PDVSA’s ad-hoc board is tangled in a lawsuit in a U.S. court over $1.68 billion in outstanding debt due holders of PDVSA’s 2020 bond, which fell into default earlier this year. Bondholders and other Venezuela creditors are seeking to collect by staking claims on Citgo’s assets and shares.

Citgo was used as a piggy bank for over a decade to finance late President Hugo Chavez’s government, Maduro’s rule and PDVSA’s budget. The refiner supported pet PDVSA projects, its shares used as collateral on loans and millions of dollars a year transferred to PDVSA as dividends.

In the past, Citgo executives who argued that more of its profit should be reinvested were criticized or dismissed by the government.

“PDVSA was sucking the money out,” said a former executive under the Maduro-led board. “Their idea was to keep everything running, but there was not a tremendous amount of capital going back” into Citgo’s operations.