CARACAS, Venezuela -- Venezuela has shelved the sale of CITGO assets in the United States worth approximately $10 billion as surging North American crude output pushes down energy prices and profit margins, said Bloomberg, citing a report in El Universal.
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 gas stations and convenience stores carry the CITGO brand at retail.
The country ruled out selling its U.S.-based refining subsidiary CITGO Petroleum Corp., finance minister Rodolfo Marco Torres told the Caracas, Venezuela, newspaper. The nation will keep investing in CITGO, he said, echoing comments made by President Nicolas Maduro in September.
CITGO said in a July 29 filing that state-owned oil company Petroleos de Venezuela SA (PDVSA) was looking for a buyer. Former oil minister Rafael Ramirez said in August that CITGO was worth at least $10 billion, while Barclays Plc said last month that the company's equity value is between $7 billion and $9 billion.
"Refining margins have fallen, and we have seen some of the CITGO refineries involved in unscheduled downtime," Andy Lipow, president of Houston-based energy consultant Lipow Oil Associates LLC, told the news agency. "Those are issues more on the minds of potential buyers than the price of oil."
West Texas Intermediate for December delivery fell close to a two-year low of $81.01 a barrel on the New York Mercantile Exchange on October 24.
The sale of CITGO could have undermined PDVSA's cash flow in the medium term and cost it market leverage in the United States, Eurasia Group analyst Risa Grais-Targow told Bloomberg.
Venezuela's dollar bonds posted the best week in six months after Maduro fueled speculation that the sale would not go through when he said on September 23 that his government would strengthen the refining company.
The country has started talks with Exxon Mobil Corp. after a World Bank arbitration court ruled earlier this month that the country must pay the company $1.6 billion for assets seized in 2007, Torres told El Universal. The country will make payments after it sets a schedule with Exxon, he told the newspaper.
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