To pay for Venezuelan projects, Chavez might sell Citgo

Associated Press / November 29, 2010

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CARACAS — President Hugo Chavez is promising to build new public housing complexes, boost social programs, and renovate the long-neglected Caracas subway — and he needs money.

The ambitious plans will squeeze Venezuela’s coffers at a time when oil earnings have slipped and Chavez is sending his foreign allies generous amounts of crude on credit.

So he has raised a possibility that once seemed remote: selling off Venezuela’s US-based oil company, Citgo Petroleum Corp.

For Chavez, it’s an idea driven both by hard-money realities and by politics.

Getting rid of the company and its refineries in the United States would give Chavez billions of dollars for domestic spending as he approaches his 2012 reelection bid and seeks to remedy problems including an acute shortage of affordable housing.

A sale would also fit with the leftist leader’s interest in distancing Venezuela from the United States while building stronger ties with allies such as Russia, China, and Iran.

Citgo has delivered oil to Venezuela’s top client for two decades, but judging by Chavez’s complaints about Citgo not turning a profit, he seems more than ready to sell it, if a buyer can be found.

“Citgo is a bad business, and we haven’t been able to get out of it,’’ Chavez said in a televised speech late last month.

He ordered his oil minister, Rafael Ramirez, to look at options for selling off the state oil company’s assets in the United States.

Chavez says the Houston-based company could be worth at least $10 billion, but analysts say it would probably fetch much less — perhaps half that — and it might be hard to find a buyer in a difficult economic climate.