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Tuesday, Sep 23, 2014
AP Florida

Garcia: Block Venezuela's sale of Citgo

Published:   |   Updated: August 27, 2014 at 09:07 PM

MIAMI (AP) U.S. Rep. Joe Garcia and Venezuelan opposition leaders in Miami called on the Obama administration Wednesday to block Venezuela's sale of U.S.-based Citgo Petroleum Corp.

Garcia said the sale of Venezuela's oil refining and distribution network in the U.S. would hurt national interests, noting a number of American corporations are owed large amounts of money by the Venezuelan government and that the country has few significant remaining assets in the U.S.

"The last thing we want them to do is delink themselves from the United States and then not pay their debtors," Garcia said.

He said Citgo's value is also "severely diminished" when no longer tied to Venezuelan oil reserves, hurting both nations' assets in the long term.

"We believe allowing this government to monetize this part of the Venezuelan patrimony would be a grave mistake," Garcia, a Democrat, said.

Venezuela has been in the throes of economic crisis and analysts have said the sale likely reflects the socialist government's urgent need for cash.

Venezuelan Oil Minister Rafael Ramirez said earlier this month Venezuela would sell Citgo for the right price. The company is believed to be worth as much as $15 billion, and Ramirez has said any sale must be for at least $10 billion to be considered.

Houston-based Citgo operates refineries in Texas, Louisiana and Illinois and sells fuel through thousands of gas stations in the U.S. Late Venezuelan President Hugo Chavez discussed selling the company but also used it to try and garner political support among the poor in the U.S.

More than 1.7 million people have received heating oil from Citgo to keep warm during the winter months, according to the oil subsidiary.

Horacio Medina, a former manager with Venezuela's state oil company PDVSA, said the proposed Citgo sale price is "much less than its actual value."

"We believe in the Venezuela of the future and we know access to the U.S. market is fundamental," he said.

The sale of Citgo could make it more difficult for companies to sue Venezuela in U.S. courts or collect a judgment, but not impossible, said Florida International University law professor Manuel Gomez said.

"They could probably sue elsewhere," Gomez said.

He said Venezuela was likely motivated to sell Citgo not to minimize its exposure to U.S. legal proceedings but to quickly obtain cash. The price of refineries has increased, making it a potentially lucrative time to sell.

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