Lyondell to buy out Citgo's stake in Houston refinery

Lyondell Chemical Co. will acquire Citgo Petroleum Corp.'s 41.25% interest in Lyondell-Citgo Refining LP for $2.1 billion, including the refining company's debt.

Aug. 17, 2006

By OGJ editors
HOUSTON, Aug. 17 -- Lyondell Chemical Co. will acquire Citgo Petroleum Corp.'s 41.25% interest in Lyondell-Citgo Refining LP for $2.1 billion, including the refining company's debt.

The 282,600 b/cd refinery in Houston processes very heavy high-sulfur crude oil. Concurrently, Lyondell negotiated a 5-year, 230,000 b/d oil contract with state-owned Petroleos de Venezuela SA.

The new contract is based on market prices, Lyondell said, adding that since late 2004, the refinery paid above-market prices for PDVSA oil based upon a 1993 contract.

The refinery was one of the original Lyondell assets at the company's formation and became part of a joint venture of Lyondell and Citgo in 1993.

If Lyondell owned 100% of the refinery during the first half of 2006, assuming the new crude contract was in place, Lyondell calculates its pro forma net income would have increased to $640 million from $450 million.

Corresponding data for 2005 indicate that pro forma net income would have increased to $772 million from $531 million. Lyondell filed its unaudited pro forma financial statements with the US Securities and Exchange Commission.