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Venezuela plans to sell Citgo Petroleum to avoid paying compensation to US oil firm ConocoPhillips, according to court papers filed by the firm in the US.
Citgo runs three oil refineries in the US worth US$10bn and is currently involved in litigation with ConocoPhillips and ExxonMobil, which are seeking US$42bn in combined compensation for Venezuela's nationalization of Conoco's assets in 2007.
In papers filed in Harris County Court in Texas, ConocoPhillips claims that "PDVSA seeks to liquidate and repatriate assets out of the current jurisdictions and to Venezuela or elsewhere to hinder collection on the claims against it because Venezuela will not recognize the arbitration awards or judgments recognizing or confirming them."
Bankers representing Venezuela have set a date for late December for prospective buyers to submit revised offers for Citgo, according to a Reuters report.
Control of Citgo would give the buyer major refining capacity in the US Midwest and Gulf Coast, where the firm owns refineries in Illinois, Louisiana and Texas with a combined capacity of some 750,000b/d. Citgo also has 48 oil terminals.
Rumors of the sale had begun circulating in August after PDVSA's then president Rafael Ramírez said Venezuela would be willing to sell Citgo for a minimum of US$10bn.
In a market research report, Barclays estimated Citgo's value at US$7bn-9bn.
In the court filing, Conoco claims that PDVSA and Caracas have kept Citgo liquidation talks under wraps, while publicly announcing that the sale would not take place.
"But privately, PDVSA has apparently continued to pursue the liquidation of Citgo," Conoco states.
The sale of Citgo would avoid its US refineries being seized should a court uphold claims against Venezuela.
Proceeds from a possible sale of Venezuelan state oil firm PDVSA's US refinery assets may be better invested at home, Institute of the Americas energy policy analyst Alexis Arthur told BNamericas in August.