Citgo to cut off 1,800 U.S. gas stations
Associated Press
July 12, 2006, 10:43PM
CARACAS, VENEZUELA - Venezuela-owned Citgo Petroleum Corp. has decided to stop distributing gasoline to 1,800 independently owned U.S. stations, shedding a lackluster segment of its business while forcing the owners of those stations to find other suppliers.
While it may create some logistical headaches for gasoline retailers in the short term, the move should not have any impact on the overall fuel supply.
Citgo currently has to purchase 130,000 barrels a day from third parties in order to meet its service contracts at 13,100 Citgo-branded stations across the U.S. This is less profitable than selling gasoline directly from its refineries.
Instead, the Houston-based company has decided to sell to retailers only the 750,000 barrels a day that it produces at three U.S. refineries in Corpus Christi, Lake Charles, La., and Lemont, Ill., according to a prepared statement late Tuesday.
As a result, the Citgo brand will disappear entirely from 10 states and be less common in four additional states, including Texas, by March 2007, when the change goes into affect, Citgo spokesman Fernando Garay said Wednesday.
Venezuelan President Hugo Chavez has long claimed that parts of Citgo's business produce losses for Venezuela and constitute a subsidy for the U.S. economy.
Oil Minister Rafael Ramirez has also charged that Citgo isn't profitable enough and that its parent, state-owned Petroleos de Venezuela, could at some point sell off some of its refineries. Garay said Wednesday he knew of no plans for Citgo to sell its U.S. refineries.
However, in a sign of the apparently lucrative relationship between the two companies, PDVSA announced Wednesday that it has so far earned $400 million in dividends this year from Citgo.
Venezuela is the world's fifth-largest oil exporter and the U.S. is its top buyer. The U.S. relied on Venezuela for about 11 percent of its oil supply in 2005.
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