Unocal’s Venezuelan Deal to Net It Over $500 Million

Unocal expects to receive more than $500 million from the sale of half its Chicago-area oil refinery to Venezuela’s national oil company, the U.S. oil firm said Friday.

Los Angeles-based Unocal said it has tentatively agreed to form a joint venture that, as previously reported, would operate a 147,000-barrel-per-day refinery in Lemont, Ill. The venture would be owned 50-50 by Unocal and Petroleos de Venezuela, or Petroven.

The agreement calls for Venezuela, a founding member of the Organization of Petroleum Exporting Countries, to supply 135,000 barrels per day of crude to the refinery on a long-term basis.

It would be Petroven’s third U.S. refinery and fifth overseas outlet for its crude oil. Venezuela and Kuwait have led a move by OPEC members to acquire refineries in major oil consuming nations to lock in buyers for its crude amid a world glut of oil.

Saudi Arabia recently completed the biggest such arrangement, buying half of three Texaco refineries and retail gasoline outlets in the southeastern United States.

Richard J. Stegemeier, president and chief executive of Unocal, said the company will use the proceeds to pay down debt and for other uses. He said completion of the deal awaits the joint venture lining up at least $400 million in financing.

The stand-alone joint venture would own the refinery, 14 terminals, more than 100 service stations, a lube oil blending and packaging plant and contracts with a network of 190 marketers in 12 Midwest states. The venture will continue to make and sell Unocal 76-branded products.