CITGO's sale of CARCO damaging for PDVSA
London 03.05.06 | From my inbox: The press release for the sale of Citgo Asphalt (CARCO) said that the subsidiary was non-strategic to Citgo. True. However, it is strategic to PDVSA in its ability to process heavy crude. The sales doesn't make economic sense. Yet, if heavy crude production is in fact falling, what production remains may be required for the orimulsion sale to China (also has to be at a steep discount to overcome the transportation cost to China).
Selling Citgo Asphalt now sidesteps the problem of not having sufficient heavy crude to supply the asphalt production later. Starts to make some sense. Also provides some additional cash when logic would say PDVSA should be investing for the future, not spending like a drunken sailor.
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