Hardly any surprise: CITGO sells Houston refinery share ... but at what a price?

In a short article dated August 3, I asked VHeadline.com readers to watch this space...

* The hot news is that the Venezuelan Oil Minister has announced that CITGO agreed to sell its minority share in the Houston refinery to its partner, Lyondell Chemical.

This was expected ... the surprise is that the price is only about $1.3 billion.

We were told the best offer (by a third party) for all the shares had exceeded $5 billion. On that basis, CITGO's 41.25% stake was worth over $2 billion ... and the shortfall needs to be explained.

* It seems the Minister has not told us all the relevant facts that justify the low price.

It may have something to do with the crude supply contract, which has irked Lyondell Chemical for some time, because (under the formula-based pricing system) the refinery has been paying PDVSA over $5 per barrel in excess of market prices.

Could the Minister kindly tell us if the present supply contract ... due to run out in 2017 ... will continue under Lyondell’s full ownership?

If so, will the same formula-based system remain in force till 2017; will it be modified or will it be scrapped and replaced by market prices?

This is the least we should know about the negotiation.

It is strange we have not yet seen an announcement by Lyondell Chemical, though this may well appear later today.