Lyondell Acquires Partner's Interest in Houston Refinery
Lyondell Chemical Company announced that it has acquired CITGO's 41.25 percent ownership interest in Lyondell-Citgo Refining LP (LCR) in a transaction valued at approximately $2.1 billion, including CITGO's portion of the refinery's debt. Concurrently, Lyondell has negotiated a new five-year, 230,000-barrel-per-day crude oil contract with a subsidiary of Petroleos de Venezuela, S.A. for the refinery. The new contract is based on market prices, which in recent years have been lower than those under the previous crude supply agreement.
The transaction, which will be immediately accretive, was financed using the proceeds of a seven-year Lyondell term loan. The acquisition gives Lyondell sole ownership of the 268,000-barrel-per-day Houston refinery, which is strategically located on the U.S. Gulf Coast with access to interstate pipelines and the Port of Houston. The facility refines very heavy high-sulfur crude oil into clean fuels including reformulated gasoline and low-sulfur diesel, as well as other high- value products such as jet fuel and aromatics. It was one of the original Lyondell assets at the company's formation and, in 1993, became part of a joint venture between Lyondell and CITGO Petroleum Corporation.
With the completion of the transaction, the refining operation will become a wholly owned subsidiary of Lyondell, joining Equistar Chemicals, LP and Millennium Chemicals Inc.; however, each will remain a separate legal entity.
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