Southland Corp. to Sell Rest of Citgo to Venezuela

From Associated Press

Southland Corp., which owns the 7-Eleven convenience store chain, announced plans Monday to sell its half-interest in Citgo Petroleum Corp. to the Venezuelan state-owned oil company for $675 million.

Petroleos de Venezuela already owns the other half of Citgo, which it bought from Southland in 1986 for $290 million.

Southland purchased Citgo, based in Tulsa, Okla., in 1983 with stock valued at $254 million.

The Venezuelan company's purchase of the remaining portion of Citgo would mark the first time that a member nation of the Organization of Petroleum Exporting Countries has bought a major U.S. oil refiner and marketer.

"I don't think it's going to have any dramatic effect," said Tom Manning, an industry analyst with Purvin & Gertz, a leading petroleum industry consultant.

"This is just a natural step: Venezuela already owned 50% of it, and Southland Corp. needs the money for its operations," Manning said, adding that the remaining half of the Citgo interests had been for sale for some time.

"Southland got into the refining business to assure themselves of a supply of gasoline. Now they've decided it's not too critical," he said.

One of Citgo's principal assets is the nation's eighth-largest refinery, located in Lake Charles, La., according to Southland spokeswoman Cecilia Stubbs Norwood. The refinery can convert low-grade crude oil into high-octane fuel.

Citgo, created from the refinery, marketing and transportation operations of Cities Service, earned $165.6 million on $4.1 billion in revenue last year.

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