Citgo: Difference between revisions

Citgo Petroleum Corporation

File:Citgopyramid.png File:Citgologo.png
Industry	Oil and Gasoline
Genre	Subsidiary
Founded	1910 Bartlesville, Oklahoma
Headquarters	Houston, Texas
Key people	Alejandro Granado, President, CEO & Director
Products	Petrochemical
Revenue	$32.028 billion USD (2004)
Number of employees	4,000
Parent	Petróleos de Venezuela S.A.
Website	www.citgo.com

Citgo Petroleum Corporation (or Citgo) is a United States-incorporated, Venezuela-owned refiner and marketer of gasoline, lubricants, petrochemicals, and other petroleum products.

Citgo has supplied 14,000 retailers, but in July 2006 announced plans to cease serving 14% of their independent retailers in the United States.

As of 2004, the company is headquartered in Houston, Texas, with over 4,000 employees and annual revenue in excess of $32 billion. Before relocating to Houston, Citgo was headquartered in Tulsa, Oklahoma. (Cities Service Company continued on under various Occidental names as a part of OXY's domestic exploration and production business, but all Cities Service trademarks are now owned by Citgo.)

History

Cities Service Period

Cities Service station in Key West, Florida.

The company traces its heritage back to the early 1900s and an oil entrepreneur named Henry Latham Doherty. After quickly climbing the ladder of success in the manufactured gas and electric utility world, Doherty in 1910 created his own organization, Cities Service Company, to supply gas and electricity to small public utilities. He began by acquiring gas producing properties in the mid-continent and southwest.

The company then developed a pipeline system, tapping dozens of gas pools. To make this gas available to consumers, Doherty moved to acquire distributing companies and tied them into a common source of supply. Cities Service became the first company in the mid-continent to use the slack demand period of summer to refill depleted fields near its market areas. In this way, gas could be conveniently and inexpensively withdrawn during peak demand times. In 1931, Cities Service completed the nation's first long-distance high pressure natural gas transportation system, a 24-inch pipeline stretching some 1,000 miles from Amarillo, Texas, to Chicago, Illinois.

A logical step in the company's program for finding and developing supplies of natural gas was its entry into the oil business. This move was marked by major discoveries at Augusta, Kansas, in 1914, and in El Dorado a year later. In 1928, a Cities Service subsidiary discovered the Oklahoma City field, one of the world's largest. Another participated in the discovery of the East Texas field, which, in its time, was the most sensational on the globe.

Over three decades, the company sponsored the Cities Service Concerts on NBC radio. The long run of these musical broadcasts were heard on NBC from 1925 to 1956, encompassing a variety of vocalists and musicians. In 1944, it was retitled Highways in Melody, and later the series was known as The Cities Service Band of America. In 1964, the company moved its headquarters from Bartlesville, Oklahoma, to Tulsa.

At the height of Cities Service's growth, Congress passed the Public Utility Holding Company Act of 1935, which forced the company to divest itself of either its utility operations or its oil and gas holdings. In a difficult decision, Cities Service elected to remain in the petroleum business. The first steps to liquidate investments in its public utilities were taken in 1943 and affected over 250 different utility corporations.

At the same time, the government was nearing completion of a major refinery at Rose Bluff just outside of Lake Charles, Louisiana, that would eventually become the foundation of the company's manufacturing operation. Using designs developed by Cities Service and the Kellogg Co., the plant was dedicated only 18 months after the first concrete was poured. A month before Allied troops landed in France, it was turning out enough critically needed 100-octane aviation gasoline to fuel 1,000 daily bomber sorties from England to Germany. Government funding through the Defense Plant Corporation (DPC) also prompted Cities Service to build plants to manufacture butadiene, used to make synthetic rubber, and toluene, a fuel octane booster and solvent.

Gas station in Bergen/NY

The years that followed saw Cities Service grow into a fully diversified oil and gas company with operations around the world. Its green, expanding circle marketing logo became a familiar sight across much of the nation.

Cities Service Company first inaugurated use of the Citgo brand in 1965 (officially styled "CITGO") for its refining, marketing and retail petroleum businesses (which became known internally as the RMT Division, for Refining, Marketing and Transportation). CITGO continued to be only a trademark, and not a company name, until the 1983 sale of what had been the RMT Division of Cities Service to Southland Corporation. (See following discussion of 1982-83 history.)

1982-1983: Demise of Cities Service and Birth of Citgo Petroleum Corporation

In 1982, T. Boone Pickens, founder of Mesa Petroleum, offered to buy Cities Service Company. Citgo responded by offering to buy Mesa, which was the first use of what became known as the "Pac-Man" take-over defense; i.e., a counter-tender offer initiated by a takeover target. Cities Service also threatened to dissolve itself by incremental sales rather than being taken over by Mesa, stating that it believed that the pieces would sell for more than Pickens was offering for the whole. Cities Service Company located what they thought would be a "white knight" to give them a better deal and entered into a merger agreement with Gulf Oil Corporation. Late in the Summer of 1982, Gulf Oil terminated the merger agreement claiming that Cities Service's reserve estimates were over-stated. Over fifteen years of litigation resulted. (For a more detailed discussion of the Cities Service vs. Gulf Oil litigation, see the topic of "Demise" under the entry for Gulf Oil.) Ironically, two years later, Gulf Oil itself would collapse as a result of a Pickens initiated takeover attempt; something that might not have happened if Gulf Oil had incurred the debt necessary to conclude the Cities Service deal.

In the chaos that ensued after Gulf Oil's termination of its deal, Cities Service eventually entered into a merger agreement with, and was acquired by, Occidental Petroleum Corporation - a deal that was closed in the Fall of 1982. That same year, Cities Service Company transferred all of the assets of its Refining, Marketing and Transportation division (which comprised its refining and retail petroleum business) into the newly formed Citgo Petroleum Corporation subsidiary, to ease the divestiture of the division, which Occidental had no interest in retaining. Pursuant to an agreement entered into in 1982, Citgo and the Citgo and Cities Service brands were sold by Occidental in 1983 to Southland Corporation, original owners of the 7-Eleven chain of convenience stores; 50% of Citgo was then sold to Petróleos de Venezuela in 1986, and the remainder in 1990, resulting in the current ownership structure.

Venezuelan controversy

Sign on a 7-Eleven gas station pump

On September 27, 2006 the 7-Eleven chain of convenience stores announced its 20-year contract with Citgo was coming to an end and would not be renewed. 7-Eleven Spokeswoman Margaret Chabris said "Regardless of politics, we sympathize with many Americans' concern over derogatory comments about our country and its leadership recently made by Venezuela's president. Certainly Chavez' position and statements over the past year or so didn't tempt us to stay with Citgo."

Citgo launched a national ad campaign in the fall of 2006 emphasizing the company's corporate social responsibility. National television ads featuring Joe Kennedy also aired through February 2007 featuring ordinary Americans thanking Citgo and Venezuela for providing discounted heating oil to low-income people.

Refinery locations

• Lake Charles, Louisiana
• Corpus Christi, Texas
• Lemont, Illinois(due to boundary shift no longer in Lemont)

Sponsorships

Citgo was a sponsor of the Wood Brothers racing team in NASCAR for many years, with drivers such as Elliott Sadler, Kyle Petty, Neil Bonnett, Morgan Shepherd and Dale Jarrett. They also sponsored the #99 Roush Racing team of Jeff Burton from late 2000 until pulling out of the sport in 2003.

The company sponsored the Citgo Pontiac-Riley of Venezuelan Milka Duno in the Rolex Sports Car Series. Duno has three overall wins in the Rolex Series and finished second at the 2007 24 Hours of Daytona, becoming the highest-finishing female in the history of the famous race. Midway through the 2007 season, Citgo sponsored the #23 SAMAX Motorsport entry in the IndyCar Series for Duno. In 2008 this sponsorship went with Duno to the Dreyer & Reinbold Racing #23 entry, which she currently shares with Townsend Bell.

Citgo is now a major sponsor of the Bassmaster Fishing Tour, and is also the sponsor of a charity golf tournament benefiting the Muscular Dystrophy Association (MDA). The company's relationship with the MDA goes back to its 1983 purchase by Southland, an existing MDA sponsor. Citgo is currently MDA's biggest corporate sponsor, and its executives have appeared on the Jerry Lewis MDA Telethon.

Consistent with its former sponsorship of the Boston Marathon, CITGO has for the past few years sponsored an elite level multisport team that competes in both adventure racing and triathlon events throughout the United States.

The Boston Citgo sign

The Citgo sign, as seen from Lansdowne St., Boston

Citgo refers to its logo as the "trimark." A large, double-faced sign featuring this logo overlooks Fenway Park in Boston, Massachusetts and has become a landmark, partly because of its appearance in the background in televised baseball games. The current 60-foot by 60-foot incarnation, unveiled in March 2005 after a six-month restoration project, features thousands of light-emitting diodes (LEDs). LEDs were selected for their durability, energy efficiency, intensity, and ease of maintenance. Earlier versions featured neon lighting; the previous sign contained some 5,878 glass tubes with a total length of over five miles.

The first sign featuring the Cities Service green-and-white trefoil logo was built in 1940, and was replaced with the trimark in 1965. In 1979 Governor Edward J. King ordered the sign turned off as an example of energy conservation. Four years later, Citgo attempted to disassemble the weatherbeaten sign, and was surprised to be met with widespread public affection for the sign and protest at its threatened removal. The Boston Landmarks Commission ordered its disassembly postponed while the issue was debated. While never formally declared a landmark, it was refurbished and relit by Citgo in 1983 and has remained in operation ever since. Neighboring Boston's Fenway Park, the sign has been nicknamed "See It Go," as when a home run is hit during a Red Sox game.

The shutoff and refurbishing was marked by a loss of functionality. The earlier sign had a seemingly endless set of variations in appearance, while the current one runs through a much shorter routine.

The sign was highlighted in the short film Go, Go Citgo and the movie Field of Dreams. It was also featured in a 1983 Life Magazine photograph feature, as well as a 1987 animated film as Kenmore Square's "neon god." The association with Fenway and the Red Sox is so strong that some local Little League fields often are decorated with replicas of the Citgo sign, as is Hadlock Field in Portland, Maine, home of the Boston Red Sox' AA affiliate Portland Sea Dogs. Citgo installed a similar (albeit smaller) sign high on the glass wall above left field in Minute Maid Park, the home of the Houston Astros. In 2007, the Astros' AA affiliate, the Corpus Christi Hooks, installed a 50-foot replica of the Boston sign in their ballpark, Whataburger Field.

A large number of individuals in the United States have become uncomfortable with the prominence of this symbol given that the company is closely associated with Venezuelan president Hugo Chavez.

On October 15, 2008 the Citgo Sign caught fire, causing about $5,000 in damage.

See also

• Brands of gasoline
• PDVSA
• On the Oil Lands With Cities Service ([Tulsa, Okla.]: Cities Service Oil and Gas Corporation, 1983) (Company History Publication)

External links

• Citgo
• Petróleos de Venezuela (Spanish)
• Citgo Logos
• Encyclopedia of Oklahoma History and Culture - Cities Service Company
• Articles from CEOs of Citgo
  • David J. Tippeconnic: The Sustainability of Affordable Fuels in America - World Energy Magazine Vol. 3 No. 1
  • Félix M. Rodríguez: World-Class Reserves, Local Service - World Energy Magazine Vol. 8 No.3
• Icons Among Us: The CITGO Sign Article with slideshow