CARACAS, Wednesday October 27, 2010 | Update
Citgo was impacted by sale of assets and financial aid to Pdvsa

Venezuelan Energy and Petroleum Minister said in 2005 that Ruhr Oel would declare a USD 1 billion dividend

Citgo sold two asphalt refineries, its stake in pipelines and other assets by a decision of the state-run oil company Petróleos de Venezuela Pdvsa (File photo)
Wednesday October 27, 2010  11:12 AM

The Venezuelan government reiterated its interest in selling the assets of Citgo Petroleum, the US subsidiary of the state-run oil company Petróleos de Venezuela.

"Citgo has eight refineries in the United States; I don't know how many thousands of distribution tanks, terminals and pipelines. It distributes fuel, produced from Venezuelan crude oil via 8,000 gas stations, yet it yields no profit for us," President Hugo Chávez said on Monday.

The Venezuelan president set a minimum price for the oil company because "Citgo should cost much more than USD 10 billion. If we sell it and put that money in banks, the benefits would be higher even if we only take interests into account."

But beyond the interest payments of an eventual sale, Citgo is a very important asset to sell Venezuelan oil abroad. According to a document prepared by Citgo, and disclosed before the bond issuance this year, the subsidiary of the state-run oil company Pdvsa claimed to be the third largest refining company in the United States and the first for its complexity and ability to process heavy oil.

From 2007 to 2009, about 71 percent of crude processed by Citgo was heavy oil with high sulfur contents, which is the type of oil produced in Venezuela.

During the same period, Citgo began to record losses. The company lost USD 201 million in 2009.

Venezuela's President Hugo Chávez said that the USD 1.6 billion sale of Venezuela's stake in the four Ruhr Oel refineries in Germany to the oil Russian group Rosneft was right because the company "did not make any profit for over 20 years."

However, in September 2005 Minister of Energy and Petroleum Rafael Ramírez reported in an interview with El Universal that Ruhr Oel would declare that year a USD 1 billion dividend.

Translated by Gerardo Cárdenas

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