PdVSA Undecided on Sale of Citgo Refineries


Venezuelas national oil company moved in the past few days to soften statements by President Hugo Chavez last week that it had decided to sell refineries owned by U.S. subsidiary Citgo.

Citgos incoming president said rather that Petroleos de Venezuela S.A. is evaluating ways to improve Citgos profitability, according to news reports. Felix Rodgriguez reportedly confirmed that divestiture is an option, but insisted that no decision has been made.

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Citgo owns three refineries in the United States and operates a fourth under a joint venture with Lyondell. One of the refineries, in Lake Charles, La., includes a paraffinic base oil plant with capacity to make 9,500 barrels per day of Group I stocks. The Lyondell-Citgo refinery in Houston makes 4,200 b/d of naphthenic base oils. Citgo also owns two U.S. asphalt plants.

Citgo has been considering upgrading the Lake Charles plant to make oils of Group II quality or better. The Houston-based company has not said if the plan – which called for a decision by the end of this year – has changed in light of the recent statements concerning its fate.

The Associated Press reported Feb. 2 that Chavez stated his intention to sell Citgos refineries during a speech in Argentina. The self-proclaimed revolutionary has had a combative relationship with the United States since coming to power in 1999. He said PdVSA will unload Citgos assets because they do not benefit Venezuelans. He accused the United States of economic imperialism, complaining that Citgo buys oil from PdVSA at discounted prices under contracts that pre-date his administration.

Rodriguez, who was recently appointed to replace Citgo President Luis Marin, said PdVSA is looking for ways to increase Citgos earnings and has not decided whether to sell the subsidiarys facilities, according to Sunday reports in various publications.

Our plans are directed at optimizing the margin of earnings, the Associated Press quoted him as saying. Rodriguez, formerly PdVSAs director of oil exploration and production, did confirm that the parent company may eventually decide to sell the U.S. refineries. He saidthe final decision will belong to Chavez.

Citgo base oil officials could not be reached for comment yesterday.

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