CITGO’s Owner Is Seeking a Buyer

HOUSTON -- Venezuelan state oil company Petróleos de Venezuela S.A. (PDVSA) will sell its CITGO Petroleum Corp. division if it receives the right price, Petroleum Minister Rafael Ramirez told news reporters on Tuesday.

Bloomberg reported that PDVSA won't accept less than $10 billion for its Houston-based CITGO division, which has a host of refining and marketing assets in the United States.

Specifically, CITGO operates three U.S. refineries in Lemont, Ill.; Lake Charles, La.; and Corpus Christi, Texas, capable of handling 749,000 gallons of fuel per day. CITGO also sells motor fuels via nearly 6,000 U.S. gas stations.

Experts told Reuters it may be difficult to find a single buyer for all of CITGO's assets because two of the refineries run heavy crude oil from Venezuela and U.S. refiners seek cheaper light crudes.

PDVSA first put CITGO up for sale in a July 29 bond prospectus. CITGO had sales of $42.3 billion last year, according to the prospectus.

As for why PDVSA is seeking the sale of CITGO, Venezuelan President Nicolas Maduro wants to sell foreign refineries to boost oil exports to China, raise cash and reduce the risk of having assets seized if it loses international lawsuits brought by former oil partners, according to a July 31 client report issued by GlobalSource Partners.

Ramirez has a different view, however. "Our situation is not like many analysts have said, claiming we need fiscal revenues," he told reporters. "We are doing well with our fiscal revenues from the oil sector."

Despite a potential sale of CITGO, Ramirez also stressed that oil deliveries to the U.S. would be unaffected.

At this point, it is too early to predict what companies could bid on CITGO's assets, nor how convenience store and gas station retailers would be affected if a sale took place.