Venezuelan President Hugo Chavez is looking to unload his country’s ownership in Citgo Petroleum Corporation. Citgo is a Venezuelan-owned oil company that sells petroleum products in the United States through thousands of different locations. The company has gas stations, motor products, and commercial lubricants that it sells direct to its customers. The company has refineries in Texas, Louisiana and Illinois.
Chavez claims that he is willing to sell the oil company because it has been unprofitable and he wants to diversify the country’s business interests. He is trying to raise funds at a time when the Venezuelan government sorely needs it. The company is wrestling with extreme poverty and housing problems. Chavez is said to want as much as $10 billion dollars for the company.
I find this story interesting for a few reasons.
The primary reason being that I had no idea that Citgo was a 100% owned Venezuelan company. I just always assumed that Citgo was still an American company. The company started out as American-owned and was sold off to Venezuela in the late 80′s.
Secondly, who is going to pay $10 billion dollars for the company? There is no way of knowing what the true value of Citgo’s operations are? All of Citgo’s revenue numbers are private information and only Chavez knows the true earnings. It would be difficult to trust any numbers that Chavez suggests knowing his penchant for fudging numbers.
Finally, who is Chavez going to sell Citgo to? I doubt that Chavez would sell Citgo to any American or Canadian company. He would look to sell the company to a country with a hostile relationship with the U.S. like Cuba.