CARACAS, Venezuela -- At least three oil companies are still actively bidding for CITGO Petroleum Corp, the U.S. refining arm of Venezuela's state-run Petroleos de Venezuela SA (PDVSA), even after the country's finance minister said that the auction was no longer going ahead, people familiar with the situation told Reuters.
CITGO said in a July 29 filing that PDVSA was looking for a buyer.
CITGO's assets include three refineries, in Lemont, Ill.; Lake Charles, La.; and Corpus Christi, Texas, with combined capacity of approximately 750,000 barrels per day (bpd). It has 48 petroleum product terminals, three fully owned pipelines and six jointly owned pipelines in the United States.
Thousands of independently owned U.S. gas stations and convenience stores carry the CITGO brand at retail.
The investment bank PDVSA hired to conduct the sale, Lazard Ltd, has not ended the sale process, the people said on Tuesday, and a deadline for a second round of bids is expected later this month. The people declined to be named because they were not authorized to speak publicly.
Any deal for CITGO, which could be worth as much as $10 billion, could help to reshape the U.S. refining landscape, giving the winning bidder access to major refining assets in the Midwest and on the Gulf Coast at a time when U.S. oil production is soaring. The CITGO refineries are in a position to access supplies of crude from U.S. shale formations and imported Canadian crude, and for Venezuela, a sale would provide much needed capital to meet its budget needs, said the report.
Finance Minister Rodolfo Marco said in an interview published in Venezuelan media on October 26 that the sale of CITGO "has been ruled out" and the nation's president, Nicolas Maduro, had "affirmed" the decision.
It was not immediately clear why Lazard was going ahead with the auction despite that declaration, the report said, and whether the process could eventually be called off.
Marco's announcement surprised bidders who had done due diligence on the CITGO assets, the news agency said.
A first round of bids attracted contenders including Marathon Petroleum Corp, Valero Energy Corp, India's Reliance Industries Ltd, PBF Energy Inc. and HollyFrontier Corp.
Valero and Marathon declined to comment to Reuters on the bidding process, and PBF, HollyFrontier and Reliance did not immediately respond to requests for comment.
Plans to sell CITGO have been controversial within the Venezuelan government, said the report. Top officials in the cash-strapped country appeared to support the divestment to help shore up its finances, while others in the leftist coalition slammed moves to sell CITGO as a covert privatization.
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