Paper Says Citgo to Cut Capital Spending

asia.reuters.com Fri January 24, 2003 06:01 AM ET

NEW YORK (Reuters) - Citgo Petroleum Corp.'s president said the company would cut capital spending, delay a $250 million public offering and reduce inventories to minimum levels this year, the Wall Street Journal reported on Friday.

He said the company is taking the measures to boost cash flow that has been hurt by the seven-week work stoppage by Venezuelan oil workers, according to the article. In a letter to employees, President Oswaldo Contreras said Citgo, would shut down the Lake Charles, La., Conversion Optimization Project and a mixed distillate hydrotreater project at its Corpus Christi, Texas refinery, the report said.

He said the company would also defer several large maintenance turnarounds scheduled at its refineries and reduce product inventories to "minimum working levels," but that it feels it "can continue to keep our customers supplied with the products they need," according to the newspaper.

Contreras will also cut the number of corporate airplanes to one, the article said. Citgo owns one plane and leases one.

Credit-rating downgrades and the slowdown in crude-oil supplies from Venezuela had raised the company's cost to do business, the Journal quoted Contreras as saying, as it bought additional volumes of crude in the open market to keep its plants running, paid more for the oil and received less-favorable payment terms.

Citgo, a wholly-owned subsidiary of Petroleos de Venezuela SA (PDVSA), said in a filing with the U.S. Securities and Exchange Commission on Tuesday it expects to receive crude oil deliveries this month from PDVSA that will equal about 83 percent of the volume it received in January 2002.

Citgo was not immediately available for comment early on Friday morning.