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Venezuela continues to postpone sale of Citgo

Venezuela continues to postpone sale of Citgo

Posted by Dubraswka Aguilar on November 26, 2014

While the Venezuelan government insists to rule out the sale of Citgo Petroleum refinery in the USA, sources close to the transaction said they have a new date available for bids.

The progress of the process is the latest example of the ambiguity of the Venezuelan government on the sale of Citgo, which pays significant dividends to the state oil company PDVSA at a time when the fall in oil prices adds to their debt problems. Venezuela also faces the imminent resolution of international arbitration cases executed after the oil nationalization under the socialist government of the late President Hugo Chavez. The sale of the refineries in the United States would eliminate the possibility of being expropriated by any court in the midst of these processes against Venezuela.

Lazard Ltd, the investment bank hired by PDVSA to explore the sale of its external refining subsidiary, set a deadline for submitting new offers the last days of December, said this week three people familiar with the process.

The three integrated Citgo refineries have a combined capacity of 750,000 barrels per day (bpd), to which are added almost 50 terminals with a total value of 10,000 million dollars, according to the aspirations of the parent company.

The winner of the bidding process will have access to one of the largest networks of refining of the central United States and the Gulf of Mexico, benefiting from the boom in oil production in the country.

In an interview published on October 26th in a local newspaper of Venezuela, Finance Minister, Rodolfo Marco, said the sale of Citgo was "discarded" causing confusion among stakeholders. However, the sale has progressed and now a new date has been set for December.

A recent first bidding round attracted stakeholders including Marathon Petroleum Corp, Valero Energy Corp, Reliance Industries Ltd of India, PBF Energy Inc. and Holly Frontier Corp. Sources said that these firms continue with the process.

Potential buyers have already moving in the efforts, including visits to Citgo refineries in Illinois and Texas.

Valero and PBF declined to comment. Marathon, Holly Frontier and Reliance did not immediately respond to requests for comment.

A representative of Citgo did not provide immediate comment. Officials from the Ministry of Petroleum and PDVSA could not be contacted. A representative of Lazard declined to comment on the case.

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