I’ll Be Around - CITGO Refineries to Be Bought by Amber Energy Seen as Survivors in Competitive Market

It now seems likely that Elliott Investment Management’s Amber Energy will acquire CITGO Petroleum for $7.3 billion in mid-2025, thereby ending a yearslong legal drama about the fate of CITGO’s three large U.S. refineries and related pipelines and terminal assets. So what exactly is Amber buying and how will the refineries in question fare in the increasingly competitive global market for refined fuels? In today’s RBN blog, we’ll summarize the long legal battle that led to Amber’s selection by a federal court’s “special master” as the preferred buyer, examine the assets to be acquired, and assess what’s ahead for CITGO’s refineries, which have a combined capacity of more than 800 Mb/d.

For a few years now, there’s been a mostly below-the-radar battle playing out in the U.S. District Court for the District of Delaware about how best to help satisfy the claims of a dozen-plus creditors who collectively lost more than $20 billion when the government of Venezuela — the de facto owner of CITGO Petroleum and its parent company, PDV Holding (PDVH) — defaulted on its bonds. In May 2021, U.S. District Court Judge Leonard P. Stark appointed Robert B. Pincus as a special master tasked with devising a plan to sell PDVH/CITGO. After a two-round bidding process that concluded in June, Pincus on September 27 recommended that the district court approve Amber Energy and its $7.3 billion bid, which while considerably lower than the $11 billion to $13 billion appraised value of PDVH/CITGO, was found to be the best offer the bidding process generated.

CITGO has a long and storied history. Starting out in 1901 as the Indian Territories Illuminating Oil Co., Cities Service Co. — formed in 1910 — by the mid-1930s had accumulated dozens of oil and gas companies and several refineries. In the early 1940s, it was part of a consortium of oil giants that quickly built the famed “Big Inch” and “Little Inch” pipelines from Texas to New Jersey to support the war effort. In 1982, Cities Service was acquired by Occidental Petroleum (Oxy), which the following year flipped the company’s then-only refinery (in Lake Charles, LA) and thousands of CITGO-badged retail gas stations to Southland Corp., which was then the owner of the 7-Eleven convenience store chain. Southland sold a 50% stake in CITGO to Petróleos de Venezuela SA (PDVSA, which owns PDVH) in 1986 and sold it the rest in 1990.

There have been many ups and downs and twists and turns since then, not only within PDVH and CITGO but in Venezuela itself. Most important for our discussion of CITGO and its current assets, the company acquired a half-stake in the Lemont Refinery 30 miles southeast of Chicago in 1989 (from Unocal) and purchased the other half in 1997. Also, CITGO came to own the Corpus Christi Refinery as part of its merger with Champlin Refining & Chemicals in 1991.