CARACAS, Venezuela -- Venezuela's state-run oil company, Petróleos de Venezuela SA (PDVSA), is now seeking preliminary offers for its U.S. unit, CITGO Petroleum Corp., by the end of September, people familiar with the matter told Reuters.
A deal could fetch up to $10 billion, said the report.
Venezuela's former Petroleum Minister, Rafael Ramirez, said in early August that PDVSA would sell CITGO if it received a good offer. "As soon as we receive a proposal that serves our interests, we will exit CITGO," he said.
Venezuela is selling CITGO in part due to a cash crunch stemming from repaying debts to China with oil, rather than selling the crude to generate revenue, the news agency said, citing analysts. The government denies a cashflow problem exists.
Within President Nicolas Maduro's government, the potential sale is controversial and seen as a privatization that would contradict years of socialist policies, including a nationalization of the oil industry in 2006 and 2007, Reuters said.
Investment bank Lazard Ltd., which is running the sale process for CITGO on behalf of PDVSA, has sent sale materials to potential buyers, sources told Reuters in recent days, asking not to be named because the matter is not public.
PDVSA also has a 50% stake in the Chalmette refinery in Louisiana with Exxon Mobil Corp. The Venezuelan oil company has tapped Deutsche Bank separately to explore a sale of its stake in that refinery, the report said.
The assets PDVSA is offering as part of the Lazard process have annual earnings before interest, taxes, depreciation and amortization (EBITDA) of around $1.5 billion, sources said.
CITGO's assets--the core of which are three refineries, in Lemont, Ill.; Lake Charles, La.; and Corpus Christi, Texas, with combined capacity of approximately 750,000 barrels per day (bpd)--could bring between $8 billion and $10 billion, the sources also said.
Ramirez said last month that the country expects to receive "more than that" if it decides to sell all the facilities.
CITGO has 48 petroleum product terminals, three fully owned pipelines and six jointly owned pipelines in the United States. Thousands of independently owned gas stations also carry the CITGO brand.
Bidders for the refineries could include HollyFrontier Corp., Valero Energy Corp., Western Refining Inc., Tesoro Corp. and PBF Energy Inc., people familiar with the matter told Reuters.
And at an energy conference on Sept. 8, Marathon Petroleum Corp. CEO Gary Heminger expressed interest in buying the assets, contradicting an earlier statement that MPC was "pretty satisfied with [its] footprint."
It may be difficult to find a single buyer for all of the assets as two of the refineries are geared to run heavy crudes from Venezuela and U.S. refining companies are trying to maximize profits by buying cheap domestic light crudes, refinery experts told Reuters. Beyond the sheer size of the deal and the attractiveness of the assets, antitrust issues could prohibit some bidders if they were to pursue a bid for all the assets, sources said.
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