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Citgo Brand Gas to Be Cut Back

July 13, 2006|From the Associated Press

CARACAS, Venezuela — State-owned Citgo Petroleum Corp. has decided to stop distributing gasoline to 1,800 independently owned U.S. stations, shedding a lackluster segment of its business while forcing the owners of those stations to find other suppliers.

While it may create some logistical headaches for station owners in the short term, the move was not expected to have any effect on the nation's overall fuel supply.

Citgo, which is wholly owned by Venezuela's state oil company, currently has to purchase 130,000 barrels a day from third parties to meet its service contracts at 13,100 Citgo-branded stations across the U.S. This is less profitable than selling gasoline directly from its refineries.

Instead, the Houston-based company has decided to sell to retailers only the 750,000 barrels a day that it produces at three U.S. refineries in Lake Charles, La.; Corpus Christi, Texas; and Lemont, Ill.

As a result, the Citgo brand will disappear entirely from 10 states and be less common in four additional states by March 2007, when the change goes into effect, Citgo spokesman Fernando Garay said Wednesday.

Citgo doesn't have any stations in California.

Venezuelan President Hugo Chavez maintains that parts of Citgo's business produce losses for Venezuela and constitute a subsidy for the U.S. economy.

Oil Minister Rafael Ramirez says that Citgo isn't profitable enough and that its parent, state-owned Petroleos de Venezuela, could at some point sell off some of the company's refineries.

The states where Citgo will stop selling gasoline are: Iowa, Kansas, Kentucky, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma and South Dakota. A limited number of stations in Illinois, Texas, Arkansas and Indiana also will be affected.

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