Citgo posts $667 million loss for 2020 on falling demand

[May 08, 2021]  By Gary McWilliams

HOUSTON, May 7 (Reuters) - Eighth-largest U.S. refiner Citgo Petroleum Corp on Friday reported a 2020 loss of $667 million due to slack demand for fuel and higher costs that crushed profit margins.

Most U.S. refining companies in 2020 suffered deep losses and four facilities halted operations as the COVID-19 pandemic sharply cut fuel demand and sales. Average U.S. gasoline consumption fell 13% last year with gasoline and diesel prices hitting a four-year low, according to government figures.

First-quarter results were not released because of a delay in meeting with Citgo's main shareholder, a spokeswoman said. Quarterly results are expected later this month.

Citgo, the U.S. refining arm of Venezuela's state oil company PDVSA, split from its parent in 2019 after Venezuela's opposition-led Congress appointed new executives and Washington imposed tighter sanctions on PDVSA, which had been the source of most of its crude and the receiver of a big portion of its fuel output.

"Our ability to persevere – through the COVID pandemic, hurricanes and the recent severe winter storm with widespread utility outages – and still enhance our operational performance, safety and corporate governance is again a testament to the dedication and professionalism of all our employees," Chief Executive Carlos Jorda said in a statement.

Citgo's full-year loss of $667 million compared with a profit of $246 million in 2019. Its fourth-quarter loss widened to $255 million from a $24 million loss a year earlier.

Refinery throughput last year was off 20% to 638,000 barrels per day (bpd) due to the pandemic and a shutdown at Citgo's Lake Charles refinery in Louisiana due to two hurricanes, the company said. Exports last year were 135,000 bpd compared with 194,000 bpd in 2019.

It has filed for a $550 million U.S. tax refund based on 2020 losses, the company said. Cost-cutting and debt refinancing allowed it to end the year with strong cash and liquidity positions, the company said. It did not disclose figures.

Citgo last year raised about $250 million by selling accounts receivable and refinanced debt to push maturity dates on about $650 million in borrowings back four years, to 2026, reducing the financial strains from the fuel market decline.

PDVSA creditors are trying to claim shares in Citgo's parent companies over unpaid debts by the Venezuelan government. A U.S. court has backed the claims, but a share auction in which the U.S. operation could be sold has been barred by U.S. executive orders protecting the company. (Reporting by Gary McWilliams in Houston and Marianna Parraga in Mexico City Editing by Marguerita Choy and Matthew Lewis)

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