Exclusive: Venezuela sets date for Citgo bids despite ruling sale out
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People wait for service in a Citgo gas station in Kearny, New Jersey September 24, 2014.
CREDIT: REUTERS/EDUARDO MUNOZ
(Reuters) - Bankers representing Venezuela have set a date for prospective buyers to submit revised offers for Citgo Petroleum Corp, according to people familiar with the matter, despite the country's finance minister ruling out the U.S. refineries sale.
The development is the latest illustration of the Venezuelan government's deep ambiguity over Citgo, which pays out heftydividends to its cash-strapped oil company PDVSA at a time when falling oil prices are adding to its debt woes.
Venezuela also faces a string of international arbitration cases as a result of nationalizations under the late President Hugo Chavez's socialist government. A sale of the U.S. refineries would eliminate the possibility of them being seized should a court considering such claims rule against Venezuela.
Lazard Ltd, the investment bank that has been hired by PDVSA to explore a sale of Citgo, has set a late-December deadline for new offers, three people familiar with the situation said this week.
Citgo runs three refineries in the United States which could be worth as much as $10 billion. The winning bidder will have major refining capacity in the U.S. Midwest and on the Gulf Coast, benefiting from a boom in U.S. oil production.
An Oct. 26 interview with Venezuelan Finance Minister Rodolfo Marco published in Venezuelan media in which he said Citgo's sale "has been ruled out" stirred confusion among interested parties. Yet the sale process has progressed and now a new milestone has been set for late December.
A first round of bids this fall attracted contenders including Marathon Petroleum Corp,Valero Energy Corp, India’s Reliance Industries Ltd, PBF Energy Inc and HollyFrontier Corp. The people said these parties continued to be in the process.
Potential buyers have already carried out some due diligence, including site visits to Citgo Petroleum Corp’s refineries in Illinois and Texas.
Valero and PBF declined to comment on the bidding process. Marathon, HollyFrontier and Reliance did not immediately respond to requests for comment.
A Citgo representative did not immediately provide comment. Officials at PDVSA and Venezuela’s oil ministry could not be immediately reached for comment. A Lazard representative declined to comment. The people asked not to be named because they were not authorized to speak on the record.
Citgo's U.S. refineries have combined capacity of some 750,000 barrels per day. They are in Lemont, Illinois; Lake Charles, Louisiana; and Corpus Christi, Texas. Citgo also has 48 oil terminals.
In addition to the Citgo refineries, Citgo's parent, PDVSA, also has a 50 percent stake in the Chalmette refinery in Louisiana alongside Exxon Mobil Corp, which owns the rest.
(Reporting By Mike Stone in New York; Additional reporting by Jessica Resnick-Ault in New York; Editing by Chris Reese)
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