Announcement

Collapse
No announcement yet.

Seeking cash, Chavez looks to sell Citgo

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Seeking cash, Chavez looks to sell Citgo

    Seeking cash, Chavez looks to sell Citgo
    By CHRISTOPHER TOOTHAKER, Associated Press Christopher Toothaker, Associated Press 6 mins ago

    CARACAS, Venezuela President Hugo Chavez is promising to build new public housing complexes, boost social programs and renovate the long-neglected Caracas subway and he needs money.

    The ambitious plans will squeeze Venezuela's coffers at a time when oil earnings have slipped and Chavez is sending his foreign allies generous amounts of crude on credit. So he has raised a possibility that once seemed remote: selling off Venezuela's U.S.-based oil company, Citgo Petroleum Corp.

    For Chavez, it's an idea driven both by hard-money realities and by politics.

    Getting rid of the company and its refineries in the U.S. would give Chavez billions of dollars for domestic spending as he approaches his 2012 re-election bid and seeks to remedy problems including an acute shortage of affordable housing. A sale would also fit with the leftist leader's interest in distancing Venezuela from the U.S. while building stronger ties with allies such as Russia, China and Iran.

    Citgo has delivered oil to Venezuela's No. 1 client for two decades, but judging by Chavez's complaints about Citgo not turning a profit, he seems more than ready to sell it, if a buyer can be found.

    "Citgo is a bad business, and we haven't been able to get out of it," Chavez said in a televised speech late last month. He ordered his oil minister, Rafael Ramirez, to look at options for selling off the state oil company's assets in the United States.

    Chavez says the Houston-based company could be worth at least $10 billion, but analysts say it would likely fetch much less perhaps half that and it might be hard to find a buyer in a difficult economic climate.

    The government's budget next year not counting the additional spending often approved by Chavez's congressional allies is the equivalent of $47.5 billion, making the possible sale of Citgo a potential shot in the arm for the president's efforts to shore up support.

    Critics say that selling Citgo could endanger Venezuela's long-term business interests since oil is the lifeblood of the economy and much of the earnings come from the U.S.

    Chavez, meanwhile, has increasingly sold oil elsewhere under less profitable deals aimed at cementing relationships with friends abroad.

    "It's hard for rational observers to understand that (Chavez) would take oil away from U.S. clients that pay cash for Venezuelan oil, in order to supply countries that consider Venezuelan oil almost as a right or as a political gift," said Gustavo Coronel, an energy consultant and former executive of state oil company Petroleos de Venezuela SA (PDVSA). "However, Chavez is no longer driven by economics but by ideology."

    If Chavez were to go ahead with a sale, Venezuela would likely seek to negotiate a supply contract to keep selling crude to U.S. refineries.

    Even so, Venezuela's oil exports to the U.S. have been declining while Chavez has sought to diversify the country's markets, shipping more crude under preferential deals to allies including Belarus, Cuba and other Caribbean islands. Some buyers are granted low-interest loans, decreasing upfront revenue.

    Oil shipments to the U.S. declined from 49 million barrels in February 1999, when Chavez took office, to 31.9 million barrels during the same month last year.

    Venezuela's overall oil output has also been declining due to lower OPEC quotas and experts say inadequate maintenance at some oil fields. While Venezuela says it produces about 3 million barrels of oil a day, the U.S. Energy Information Administration estimates 2.2 million barrels a day in 2009, down about 190,000 barrels from 2008.

    Coronel said that when Venezuela bought Citgo, it was a good deal. PDVSA purchased 50 percent of the company in 1986 from Southland Corp. for $290 million as part of a drive to have its own refineries and other facilities in its key markets, the U.S. and Latin America. The state oil company purchased the remaining 50 percent of Southland's shares in Citgo in 1990 for $675 million.

    Since then, Citgo has grown. It now operates three refineries in Texas, Louisiana and Illinois, and sells fuel through thousands of gas stations. Citgo has been used by Chavez to distribute discounted heating oil to poor American families in a high-profile program aimed at criticizing Washington's approach to the needy.

    Another motive for selling Citgo could be to reduce Venezuela's exposure to U.S. court suits over Chavez's expropriations of U.S. company assets.

    U.S.-based Exxon Mobil Corp. has sought international arbitration to claim billions of dollars in compensation after it refused to accept the government's terms for a 2007 nationalization of an oil project in which it had invested heavily.

    Citgo, for its part, took a $201 million loss last year, and issued $3.5 billion in bonds this year as its profits plummeted. Profits were battered by lower world prices and a declining flow of heavy, sulfur-laden crude.

    "I don't think there would be much interest now" in buying Citgo, said Lou Pugliaresi, president of the Energy Policy Research Foundation, a Washington-based think tank. "But Chavez might find a buyer at the right price."

    None has publicly stepped forward yet. Exxon and other major U.S. refiners such as Chevron Corp. and ConocoPhillips might end up being interested in Citgo or some of its assets, said Guaicaipuro Lameda, a former PDVSA president and government critic.

    "It has the potential to be a good business if it's well managed," Lameda said. "But it's not being well managed, and that's causing problems."
    Copyright 2010 Yahoo! Inc. All rights reserved.

    * Que
    To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway

  • #2
    Ideology vs. reality: reality wins!
    "Only Nixon can go to China." -- Old Vulcan proverb.

    Comment


    • #3
      Correct me if I'm wrong, but didn't Chavez effectively steal Citgo from the private sector many years ago?
      And since then, hasn't he run it into the ground with his socialist policies? And now he does not understand why it is not profitable and he wants to sell it.
      Good luck. Any fool that would invest in Venezuela now, after what he has done to private interests in the past, will loose his shirt and get what he deserves. Hugo Chavez is proving to be the poster boy for the whole world, how retarded, disingenious, and corrupt socialism really is. I hope socialists worldwide are paying attention.
      Don't listen to me, I'm a wack job.

      Comment


      • #4
        Citgo is a US-based corporation with most of its assets in the US. If US interests buy it, the assets will be free of Chavez's designs, unless the deal includes a steady supply of Venezuelan oil. As long as Chavez has his hand on the taps, no telling when he'll claim his social agenda justifies turning them off to US refineries. Still, a US owned CITGO could adapt and operate the refineries using other oil sources.
        To be Truly ignorant, Man requires an Education - Plato

        Comment


        • #5
          There is still a disconnect between what Chaves thinks citgo is worth and what it REALLY is worth. Therefore reality has not won just yet. At a time when oil companies have been making money hand over fist while citgo is not doing well....What is wrong with this picture?
          Removing a single turd from the cesspool doesn't make any difference.

          Comment


          • #6
            Just a guess, but I'd say Chavez doesn't know how to run a refining and gas distribution company.
            To be Truly ignorant, Man requires an Education - Plato

            Comment


            • #7
              Originally posted by JAD_333 View Post
              Just a guess, but I'd say Chavez doesn't know how to run a refining and gas distribution company.
              Safe bet. Really sticking your neck out there huh? LOL. If you let a mad man run the company make sure he is autistic like Bill Gates, instead of Bozo, er, I mean Chaves.
              Removing a single turd from the cesspool doesn't make any difference.

              Comment


              • #8
                If someone was to buy it wouldn't that mean they support Chavez? Not that anyone in a position to buy it has any scruples. I hope the whole damn thing goes belly up on his communist ass!

                Comment


                • #9
                  Originally posted by 7thsfsniper View Post
                  If someone was to buy it wouldn't that mean they support Chavez? Not that anyone in a position to buy it has any scruples. I hope the whole damn thing goes belly up on his communist ass!
                  7th, the money would help Chavez with his socialistic endeavors, but buying it might good business (and good ridance). Depends on the price. After he's spent the money, the company will still be around, and it might be good for shareholders to get new management in there. A lot of domestic jobs would be lost if the company went bellyup.
                  To be Truly ignorant, Man requires an Education - Plato

                  Comment


                  • #10
                    Originally posted by JAD_333 View Post
                    7th, the money would help Chavez with his socialistic endeavors, but buying it might good business (and good ridance). Depends on the price. After he's spent the money, the company will still be around, and it might be good for shareholders to get new management in there. A lot of domestic jobs would be lost if the company went bellyup.
                    I'm thinking when a biz goes belly-up, there has to be someone holding some of the purse strings. I don't know the details, but I still bet that there is a bank behind Chavez and they will get thier money and flush Chavez and Venezuela down the drain(too bad for Venezuela, but they should have dumped Chavez long ago)

                    I think it would be like if we had allowed GM to file bankruptcy and restructure without assistance from the govt. Had they, I would still be a dyed in the wool chevy fan, now, they can bite me, I will never have a chevy newer than the '97 I have.

                    But I digress, I think I've heard that George Soros has bought into CITGO and he loves Chavez and commies more than he loves the US so I have to take the whole "they are in trouble" news with a grain of salt.

                    Show me the failure!;)

                    Comment


                    • #11
                      CITGO has a long history of merger and merger attempts. Occidental ended up with it in the 1980s. Southland (7-11) bought rights to the name and logo from Occidental. You probably noticed 7-11s mostly sold CITGO until recently. Venezuela bought half the company from Occidental in 1985 and the other half in 1990. Southland didn't renew its rights to the GITGO name in protest over Chavez's badmouthing the US. (Good for them). But that didn't stop Robt Kennedy Jr from touting Chavez's give-away of heating oil to low-income sr Americans. In any case, if US or other interests buy the company from Venezuela, it would probably be for the better. It would rid the company of Chavez's influence. Credit for the above facts go to Wikipedia.
                      To be Truly ignorant, Man requires an Education - Plato

                      Comment


                      • #12
                        But that didn't stop Robt Kennedy Jr from touting Chavez's give-away of heating oil to low-income sr Americans.
                        hell, i wish he'd continue to do that. every dollar chavez spends on these propaganda giveaways is one less dollar he can use on weapons.
                        There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                        Comment


                        • #13
                          Originally posted by 7thsfsniper View Post
                          If someone was to buy it wouldn't that mean they support Chavez? Not that anyone in a position to buy it has any scruples. I hope the whole damn thing goes belly up on his communist ass!
                          ;) Right with you here.
                          Fortitude.....The strength to persist...The courage to endure.

                          Comment


                          • #14
                            Originally posted by astralis View Post
                            hell, i wish he'd continue to do that. every dollar chavez spends on these propaganda giveaways is one less dollar he can use on weapons.
                            Ever the pragmatist...lol
                            To be Truly ignorant, Man requires an Education - Plato

                            Comment


                            • #15
                              Originally posted by Dreadnought View Post
                              ;) Right with you here.
                              I don't get you guys. GITGO is an American company no matter who owns it. If it goes belly up, in Houston alone 3,000 people will be out of work. Is that what you want?
                              To be Truly ignorant, Man requires an Education - Plato

                              Comment

                              Working...
                              X