Venezuela’s government-run oil company is seeking preliminary bids for its U.S.-based oil subsidiary Citgo. The sale, which would constitute Venezuela’s largest retreat from the U.S. refinery market, could be worth as much as $10 billion, according to Reuters.
Citgo had long been seen as a burden on Venezuela’s economy. The late President Hugo Chávez called it a “bad business” and had suggested selling Venezuela’s U.S.-based assets on several occasions. Oil Minister Rafael Ramírez first confirmed last month that the state-run oil company, Petróleos de Venezuela S.A., would sell Citgo as soon as it received an acceptable offer, but said any sale would have to be at least $10 billion.
Citgo, based in Houston, has three main U.S. refineries in Louisiana, Texas and Illinois. The company has sold gasoline in thousands of stations across the U.S. and has a program that provides heating oil to low-income households and homeless shelters.
Selling Citgo has been a controversial topic within Venezuela, with some members of President Nicolás Maduro’s government calling it a move toward privatization. Meanwhile, U.S. Rep. Joe Garcia, D-Fla., and members of Venezuela’s opposition in Miami have called on the Obama administration to block the sale, saying it would help Caracas “delink” itself from the United States while still owing large debts to several U.S. corporations.
Venezuela has been struggling with debt burdens as it faces a cash flow problem stemming in part from tight currency controls. The move also comes as Venezuela released its first inflation figures in several months, showing an annual inflation rate at 63.4 percent – its highest rate in six years and the highest in the Western Hemisphere. Meanwhile, London-based research firm Capital Economics estimated that Venezuela's GDP would contract by 5 percent in 2014-2015, and warned of a "growing risk of a much deeper recession and default."