CARACAS (Reuters) - Venezuela’s opposition on Tuesday celebrated a sweeping U.S. sanctions order against the government of President Nicolas Maduro, saying the measure would protect Venezuela-owned U.S.-based refiner Citgo from seizure by creditors.

FILE PHOTO: Venezuela's President Nicolas Maduro waits for Enrique Iglesias, a Special Adviser of the European Union for Venezuela, before their meeting at the Miraflores Palace in Caracas, Venezuela July 9, 2019. REUTERS/Carlos Garcia Rawlins

Three allies of opposition leader Juan Guaido also said the measure allowed for restructuring negotiations with bondholders, which had been prohibited under previous sanctions. That could be key to protecting Citgo, since half of state oil company PDVSA’s shares in the refiner were put up as collateral for its 2020 bond.

Washington on Monday announced a freeze on all Venezuelan government assets in the United States, escalating an economic and diplomatic pressure campaign aimed at removing the socialist president.

The move comes after Guaido asked the United States to issue an executive order protecting Citgo, which bondholders and other parties are eyeing for possible seizure as a way to receive compensation from Venezuela for unpaid debts.

“Today there is no possibility of losing Citgo,” Guaido, the leader of the opposition-controlled Congress, who in January invoked Venezuela’s constitution to assume an interim presidency, told reporters on Tuesday.

The United States and most Western nations have recognized Guaido as Venezuela’s legitimate leader, arguing Maduro’s 2018 re-election was illegitimate. Maduro calls Guaido a U.S.-backed puppet, and his foreign ministry said the new U.S. measure formalizes a “blockade.”

Creditors that could lay claim to Citgo include companies like Canadian gold miner Crystallex suing for compensation for nationalization of their assets as well as investors holding bonds issued by PDVSA.

An ad-hoc board of directors for PDVSA appointed by Guaido made a $71 million interest payment on the 2020 bond VE151299784= in May, but failure to make a $913 million payment due in October could pave the way for creditors to seize Citgo shares.

An exemption to the sanctions published by the Treasury Department on Tuesday authorized U.S. persons to engage in transactions with anyone appointed by Guaido to lead a Venezuelan state-owned entity. Two members of Guaido’s team, including his chief overseas legal representative, Jose Ignacio Hernandez, said that paved the way to talks with bondholders.

“PDVSA’s ad-hoc board is designing a strategy to resolve the 2020 bond, which includes sitting down to negotiate with bondholders,” Luis Pacheco, the chair of the ad-hoc board, told Reuters.

Citgo declined comment, while PDVSA did not immediately respond to a request for comment.

Houston-based Citgo operates refineries in Texas, Louisiana and Illinois that can process up to 749,000 barrels of crude oil per day. It had relied on its parent in Venezuela for heavy crude supply before U.S. sanctions were introduced in January, and now imports mostly from Mexico and Colombia, according to U.S. Energy Department figures.

The asset freeze follows repeated rounds of sanctions against Maduro that have hampered Venezuela’s already collapsing socialist economy but failed to dislodge him, or convince his military allies to turn against him.

SUPPORTING A ‘BRUTAL DICTATORSHIP’

Monday’s executive order maintained certain exemptions to the sanctions for companies that do business with PDVSA.

Licenses to the sanctions published on Tuesday reiterated that companies can continue to do business with Citgo for 18 months without fear of getting sanctioned, and that U.S. companies, including Chevron Corp CVX.N, can continue operating in Venezuela through Oct. 25.

The Treasury Department also authorized the Nynas joint venture between PDVSA and Finnish biofuel producer and oil refiner Neste NESTE.HE to continue business with PDVSA through October.

Maduro retains the backing of allies like Russia and China, whose state-oil companies Rosneft ROSN.MM and China National Petroleum Corp (CNPC) have maintained joint ventures with PDVSA and continued buying Venezuelan crude, mostly to collect on loans.

Several other European and Asian companies, including Spain's Repsol REP.MC, France's Total TOTF.PA, and India's Reliance RELI.NS, have maintained business with PDVSA despite U.S. sanctions on the company issued in January. The new measures did not add much more risk to non-U.S. companies with PDVSA ties, said Richard Nephew, a former U.S. official now at Columbia University.

“There is very little new exposure to most folks doing business with the government of Venezuela since most of that was oil-related,” Nephew said.

U.S. National Security Adviser John Bolton issued a warning to Chevron on Tuesday, when asked by reporters about the company’s presence in Venezuela during a summit in Lima, Peru.

“I would say to the board of directors and the shareholders of any American companies: Is it in your corporate culture to engage in commercial activity that supports a brutal dictatorship? Is that really how you want to be known?” Bolton said.

In response, a Chevron spokesman said the company’s “operations in Venezuela continue in compliance with all applicable laws and regulations.”