Petroleos de Venezuela SA, the Latin American nation’s state-owned crude producer, said the U.S. oil refining and marketing assets it’s seeking to sell are worth more than $10 billion.
“Their value is much, much more,” Rafael Ramirez, president of the oil producer known as PDVSA, told reporters yesterday. The company is receiving offers for assets of Houston-based Citgo Petroleum Corp., he said, without providing details of the value of the bids received.
PDVSA is seeking to sell Citgo assets, the U.S. unit said in a July 29 bond prospectus document. The company owns three refineries capable of handling about 749,000 barrels a day in Louisiana, Texas and Illinois, and sells gasoline through about 6,000 stations.
“We are not a refining company, we’re an oil producing company,” Ramirez said at an event marking 100 years of Venezuelan oil production in the western Zulia state.
Venezuela President Nicolas Maduro is seeking to sell foreign refineries to boost oil exports to China, raise cash and reduce the risk of having assets seized if it loses international lawsuits brought by former oil partners, GlobalSource Partners’ Ruth de Krivoy and Tamara Herrera said July 31 in an e-mailed report to clients.
“Our situation is not like many analysts have said, claiming that we need fiscal revenues,” Ramirez said. “We are doing well with our fiscal revenues from the oil sector.”
Contract disputes and expropriations have been filed at the International Centre for Settlement of Investment Disputes and the International Chamber of Commerce’s Court of Arbitration by mining and oil companies that operated in the country including Exxon Mobil Corp. (XOM), Gold Reserve Inc., Phillips 66 and ConocoPhillips.
“With takeovers of Exxon and ConocoPhillips upgraders, these assets could be potentially taken to satisfy an arbitration ruling against them,”Andy Lipow, president of Houston-based Lipow Oil Associates LLC energy consulting firm, said in a phone interview.
Venezuela is Latin America’s biggest oil exporter, shipping 1.8 million barrels a day in 2013, according to the BP Statistical Review of World Energy.
Maduro has spent revenue from exports on social programs created by predecessor Hugo Chavez and debt repayments, pushing the country’s public sector deficit to 12.3 percent of gross domestic product last year, according to Barclays Plc.
Citgo had sales of $42.3 billion last year and earnings before interest, taxes, depreciation and amortization of $1.8 billion, according to the bond prospectus. - Bloomberg