Skip to main content

The sale of CITGO

Hydrocarbon Engineering,

GlobalData has said that a Chinese company that possesses the capital and ambition to strategically expand its influence is the most likely buyer of Citgo Petroleum Corporation (CITGO). PDVSA is currently looking to sell the company for approximately US$ 10 billion and a Canadian bid is also said to be possible by GlobalData. Carmine Rositano, Managing Analyst, Downstream Oil and Gas at GlobalData has commented that Chinese companies have already invested billions of dollars in the Canadian oilsands and they could use the equity produced to supply heavy sour crude oil to the CITGO refineries. Also, GlobalData has said that while the assets up for sale are strategic to the US energy complex, a Chinese purchase would be more flexible in terms of structuring a deal that meets the requirements of PDVSA and Venezuela as a whole.

Comments on China

Rositano said, ‘Venezuela currently exports 500 000 bpd of crude to China to pay off its US$ 17 billion debts, but additional loans now require a further 100 000 bpd. Despite extensive reserves, PDVSA has struggled to meet production targets as the government has allocated increasingly less funding to upstream development. As such, freeing up crude that would otherwise be sold to CITGO would enable Venezuela to meet its obligations with China.’

Looking to Canada

Of course, another possibility is that a Canadian oil company will bid. Suncor and Husky Oil own refineries in the US. Suncor already processes Canadian crudes at its facilities and Husky Oil is upgrading its refinery to increase the throughput of Canadian oilsands crudes.

Rositano said, ‘Canadian oilsands crude production is forecast to increase steadily, and the status of proposed pipelines to transport crudes to Canada’s west coast for exports is now uncertain, the lawsuits against the proposals pending. Purchasing the three CITGO refineries, which are already geared to run heavy sour oilsands crudes, would appear to be a good option for a Canadian oil company.’

Rositano has further commented that while PDVSA has long considered selling off CITGO. The timing now is better than ever and that reasonable offers are not only likely to be considered, but previous deals suggest that they will be lower than the reported US$ 10 billion asking price.

Edited from press release by Claira Lloyd

Read the article online at:


Embed article link: (copy the HTML code below):