CITGO vs. The New York Times

Oil company responds to allegations of corporate turmoil

HOUSTON -- CITGO Petroleum Corp. has responded to aNew York Times article, The Troubled Oil Company, published earlier this week, downplaying much of the alleged internal turmoil.

The newspaper story said, Ever since Hugo Ch avez was elected president of Venezuela in 1998, the American executives at [CITGO] have worried about their future under the mercurial leader. Their fears may be coming true. Current and former CITGO executives have revealed in recent weeks that Ch avez has shaken to the core the company's once-staid culture, leaving CITGO in a [image-nocss] state of near disarray. Nearly every high-ranking executive has resigned over the last two years, including the refining chief, the [CFO], the head auditor and the marketing director.

It said, The upheaval means CITGO has been slow to seize on growth opportunities in oil refining, which is experiencing its strongest returns in more than two decades. On Sunday, Venezuela's oil minister, Rafael Ramirez, said the government planned to sell two CITGO refineries in the United States, possibly signaling Ch avez's intent to disassemble the American subsidiary, which has existed since 1910.

The report added, Of the recent moves, perhaps the most debilitating have been Ch avez's efforts to put his loyalists, including some former military colleagues, in charge of the company. In doing so, he has reversed a tradition, in place since Petr aleos de Venezuela [PDVSA] took control in 1990, that American executives run CITGO.

In interviews with the Times, more than a dozen former CITGO managers said a marked shift in CITGO's culture came after the arrival of the Venezuelan expatriates, who moved the company from Tulsa, Okla., to Houston. Its structure was reorganized into committees, and decision-making reportedly slowed considerably. Managers felt paralyzed in their ability to approve what had been routine expenditures, and some managers complained about a culture of intimidation, said the report.

(To read the complete New York Times story, click here.)

CITGO's response: The headlineleads the reader to believe that the company is in poor shape yet, later in the article, the writer points out the company's impressive results for 2004. Clearly, CITGO remains a vibrant, extremely strong company with record earnings, excellent safety and environmental performance and good operations.

It adds that more than half of CITGO's senior staff remain non-Venezuelan employees.

The statement details the company's financial soundness and successes. Venezuela, through PDVSA, has made substantial investments in CITGO, allowing CITGO to grow dramatically and become a major player in the world's energy market.For example, CITGO recently completed a $300 million, 105,000 barrel-per-day (bpd) crude capacity expansion at its Lake Charles, La., refinery, making that facility the fourth largest in the United States.Thus, CITGO is a key component of Venezuela's strategy to maintain a strong presence in the United States and the company continues to evaluate opportunities to improve its operations.

(To read the complete CITGO response, click here.)