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HOUSTON -- CITGO Petroleum Corp. and Lyondell Chemical Co. have decided to discontinue plans to sell their Lyondell-CITGO Refining LP partnership and the associated refinery in Houston, according to a written statement by Lyondell.
Offers from interested parties exceeded $5 billion, but Lyondell said it determined that the offers were not enough to persuade the companies to sell its ownership of the refinery's 268,000 barrel per day capacity. Lyondell's decision stemmed from the strength of the U.S. refining cycle, its earnings, synergies with the company's chemical holdings and the loss potential a sale would create.
The two companies continue to discuss options, including Lyondell's acquisition of CITGO's stake in the partnership or the extension of the partnership. Lyondell owns a 58.75 percent stake in the partnership, while CITGO owns the rest.
A decision will be made in the near future, Lyondell said in the statement.
Lyondell and CITGO announced in April plans to sell their joint-venture refinery, which supplies between 110,000 and 120,000 barrels per day of gasoline to CITGO.
Last week, one day after announcing it was cutting 14 percent of its 13,000 service station network, CITGO said there should be no further cuts after the refinery is sold, Reuters reported. It is unclear whether this change in plans will affect that.
CITGO is now supplying its service stations beyond what its refineries produce, which means the company has to buy 130,000 barrels of gasoline each day on open markets, according to Reuters. A Citgo executive said it was going to get more difficult with the sale of Lyondell-Citgo Refining. With the planned reduction in stations, the company's service station network will be in balance with its production.