Venezuela likely to lose Citgo assets?

Fuel Fix:

Financially crippled Venezuela likely will lose control of its Houston refining arm Citgo Petroleum once a slew of lawsuits eventually are resolved, and it's just a matter of when and to whom, finance and energy analysts said Friday.

A federal judge ruled late Thursday that a defunct Canadian mining firm can go after Citgo's assets to collect $1.4 billion it allegedly lost from Venezuela when the government seized mining and energy assets more than a decade ago under the late socialist leader Hugo Chávez.

While the Canadian firm, Crystallex International, is unlikely to take control of Citgo's refining and retail gasoline assets throughout the U.S., the ruling is expected to kick off an array of new legal claims against Venezuela and its state oil company - from Houston-based ConocoPhillips to other oil and gas firms - with the goal of winning Citgo as the prize, legal and finance experts said. After all, Venezuela owes a lot of money to a lot of different companies.

Whichever company eventually wins out could sell to refiners that might be interested, including San Antonio's Valero Energy, Houston's Phillips 66, Ohio-based Marathon Petroleum and New Jersey's PBF Energy, said Jennifer Rowland, and energy analyst with Edward Jones in St. Louis.

"It's not every day that a suite of refineries becomes available, especially along the Gulf Coast," Rowland said. "Those assets would definitely fit in some companies' portfolios."

Citgo, which declined comment Friday, owns oil refineries in Corpus Christi, Lake Charles, La., and Illinois. The company employs about 4,000 people in the U.S., including 800 in Houston. Citgo has roughly 160 branded gas stations in the Houston area, and about 5,500 nationwide. The company is valued at nearly $8 billion.
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Nearly half of Citgo's assets are pledged as collateral for a loan from Russia.  Also, Citgo's refinery assets are largely set up to deal with teh heavy crude from Venezuela and would be questionably beneficial to companies producing the light crude from shale wells.  Still, the company could lose control of the assets and it is not clear which of those with judgments against Venezuela would come first in seizing assets.