Venezuela's state-run oil company PDVSA is seeking preliminary offers for its U.S. unit Citgo Petroleum by the end of September, a deal that could fetch up to $10 billion, according to two people familiar with the matter.



Venezuela is selling Citgo in part due to a cash crunch stemming from repaying debts to Beijing with oil, rather than selling the crude to generate revenue, analysts say. The government denies a cashflow problem exists.

Within President Nicolas Maduro's government, the potential sale is controversial and seen as a privatization that would contradict years of socialist policies, including a nationalization of the oil industry in 2006 and 2007.

Investment bank Lazard, which is running the sale process for Citgo on behalf of PDVSA, has sent offering materials to potential buyers, the people said in recent days, asking not to be named because the matter is not public.

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PDVSA also has a 50 percent stake in the Chalmette refinery in Louisiana alongside Exxon Mobil, which owns the remainder. The Venezuelan oil company has tapped Deutsche Bank separately to explore a sale of its stake in that refinery.

The assets being offered as part of the Lazard process have annual earnings before interest, taxes, depreciation and amortization (EBITDA) of around $1.5 billion, four people said. Citgo's assets, the core of which are three refineries with combined capacity of 749,000 barrels per day (bpd), could fetch between $8 billion and $10 billion, three of the people said.

Venezuela's former Petroleum Minister, Rafael Ramirez, said last month that the country expects to receive "more than that" if it decides to sell all the facilities.

Ramirez, who was named foreign minister last week after a decade leading the country's petroleum industry, was pushing hard for Citgo's sale.

He was replaced by Eulogio Del Pino, who is seen by the market as an experienced technocrat deeply involved in exploration and production projects.

Citgo has 48 petroleum product terminals, three fully owned pipelines and six jointly owned pipelines in the United States. Its brand is also carried on thousands of gas stations that are independently owned.