Engineering News

Citgo to sell refinery interest to Lyondell
Wed Aug 2, 2006 1:04pm ET

HOUSTON, Aug 2 (Reuters) - Lyondell Chemical Co. LYO.N reached an agreement to buy Citgo Petroleum Corp.'s minority interest in a joint venture refinery in Houston, sources said on Wednesday.

Lyondell is expected to announce the deal to become the sole owner of the 270,000 barrel per day (bpd) refinery along the Houston Ship Channel within days, the sources said.

Lyondell spokesman David Harpole declined to comment on the refinery's status.

"We have made no comment on the status of the refinery," Harpole said. "If or when there is an agreement, we will issue a news release."

Citgo spokesman David McCollum also declined to comment.

"We don't comment on ongoing negotiations," McCollum said.

Lyondell, which owns 58.75 percent of the Lyondell-Citgo Refining LP that operates the refinery, and Citgo, which owns the remainder of the partnership, pulled the refinery from an auction on July 20.

During the final round of bidding on the refinery, configured to refine high-density, high-sulfur Venezuelan crude, bids exceeded $5 billion, Lyondell said.

Based on a valuation of $5 billion, Citgo's interest could be worth at least $2.06 billion.

Citgo is the U.S. refining and marketing arm of Venezuela's state-owned oil company Petroleos de Venezuela S.A. (PDVSA)

Shares of Lyondell were up 38 cents or 1.74 percent in midday trade on the New York Stock Exchange.

The two partners originally said they wanted to sell the refinery to end a troubled 14-year relationship often likened to an unhappy marriage with the partners trading accusations abuse and infidelity.

Lyondell and Citgo formed the partnership in 1992 when Citgo agreed to finance a upgrade of the refinery to create a market for crude supplied by PDVSA.

Until the announcement of the auction in April, Lyondell executives had said they didn't want to sell the refinery because of the revenue it produced and the stream of feedstocks for its petrochemical operations.

The refinery provided Lyondell with $6.7 billion in revenue in 2005.

Source: Reuters

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