Venezuelan Oil Supply at Risk; Chavez Looks to Sell 8 Refineries in U.S
Byline: Kelly Hearn, THE WASHINGTON TIMES
BUENOS AIRES - Venezuelan President Hugo Chavez says he is looking to sell off eight oil refineries that his country owns in the United States, raising questions about the long-term plans of the major U.S. oil supplier.
Mr. Chavez's announcement, made this month in Buenos Aires, comes during worsening bilateral relations and indications that Venezuela is exploring ways to shift more of its oil sales to energy-hungry China.
U.S. authorities are paying cautious attention. Even before the refineries announcement, Senate Foreign Relations Committee Chairman Richard G. Lugar, Indiana Republican, had asked the Government Accountability Office to study the impact if Venezuela were to shut down its sale of 1.4 million barrels of oil per day to the United States.
Caracas owns Citgo
The eight refineries are operated by Texas-based Citgo, which was purchased in the 1990s by PDV America Inc. - a wholly owned subsidiary of Petroleos de Venezuela, a state-owned oil company.
The company owns or operates refineries in Texas, Louisiana and Illinois, and holds a minority stake in the Lyondell-Citgo refinery in Houston and asphalt refineries in Paulsboro, N.J., and Savannah, Ga.
Industry analysts think Venezuela originally was interested in owning the refineries to guarantee a market in the United States for its comparatively heavy, hard-to-refine oil. That logic still holds, leaving the analysts to speculate about the motives behind Mr. Chavez's Feb. 1 announcement.
Newly appointed Citgo President and Chief Executive Officer Felix Rodriguez insisted the next day that no decision had been made on a sale, and an oil ministry official speaking on the condition of anonymity told the Associated Press, "It will take two years to get the sale process on track."
Analysts said Venezuela likely would want to boost its ability to refine crude oil at home before selling the American refineries - a process that some said could take up to five years.
Firm trims exposure
Petroleos de Venezuela officials said the company simply was looking for ways to "reduce its market exposure." But the reports have seeded rampant speculation that Mr. Chavez - fearing U.S. sanctions or the seizure of Venezuelan assets - wants to divert future oil supplies from the United States to other trading partners.
U.S.-Venezuelan relations have been on a downward spiral at least since the United States endorsed a failed coup attempt in Caracas in April 2002. Most recently, the Chavez government responded bitterly after The Washington Times reported U.S. criticism of government plans to purchase 100,000 rifles and other arms from Russia.
The United States also is concerned about Mr. Chavez's increasingly close relationship with Cuba. In recent weeks, he announced the creation of an "anti-imperialist" civil defense force in Venezuelan "neighborhoods and factories," which follow the model of similar forces in Cuba. …