In a deal that signals Conoco’s focus on Group II and III base stocks, the Houston energy company has agreed to sell its share in the Cit-Con lubricant and wax refinery to partner Citgo Petroleum Corp.
Acquisition of Conoco’s 35 percent interest gives Tulsa, Oklahoma-based Citgo sole ownership of the Lake Charles, La., base oil refinery, and ends a partnership that built the facility more than 45 years ago. The sixth-largest paraffinic lubricants refinery in the United States, its capacity is 9,600 barrels per day of base oil and 2,000 b/d of wax.
Citgo’s announcement of the deal included a statement by Conoco Downstream North America President Richard Severance that the partnership had been good for Conoco but that the Cit-Con refinery is no longer a strategic fit. Conoco is apparently concentrating its base oil operations on its Excel Paralubes joint venture with Pennzoil-Quaker State. Conoco operates that partnership’s Westlake, La., refinery, which is second largest in the United States with base oil capacity of 21,500 b/d.
Excel Paralubes produces Group II and Group III base stocks, which sell at higher prices than Group I stocks. Demand for Group II stocks has increased as lubricant blenders reformulate products to meet new specifications for passenger car and diesel truck engine oils.
The parties did not disclose the price and spokesmen said they knew of no timetable for completion of the deal.
Citgo, which already operates the Cit-Con refinery, said the acquisition will expand its role as an international lubricant and wax supplier. Senior Vice President of Refining and Petrochemicals Adolph Lechtenberger said the company will consider upgrading the refinery and may supply it in the future with Venezuelan crude oil feedstock.
Citgo is owned by PDV America Inc., an indirect wholly owned subsidiary of Petroleos de Venezuela S.A., the national oil company of Venezuela. Cit-Con is currently supplied with crude purchased on the spot market.
PDVSA owns three base oil refineries with total capacity of 14,800 b/d in Venezuela and the Netherland Antilles.