Thursday, Sep 28, 2006
By: Gregory Wilpert – Venezuelanalysis.com
CITGO President and CEO, Felíx Rodriguez, said that CITGO was the party that decided to discontinue supplying 7-Eleven, two months ago, not the other way around.
Caracas, Venezuela, September 28, 2006 —Felix Rodriguez, the CEO of Citgo, the Venezuelan-owned gasoline producer and distributor in the U.S., clarified yesterday that it was Citgo that had let expire its contract with the 7-Eleven convenience store chain and not the other way around, as was broadly reported.
According to most press accounts, 7-Eleven spokespersons implied that the discontinuation of the supply contract for its gas stations was at least partially motivated by Chavez’s UN speech, in which he referred to President Bush as the “Devil.”
“[The reports are] a manipulation because ever since the month of July have we announced that we did not intend to renew a contract with [7-Eleven], which was 20-years old and that was part of a bad business deal for Venezuela,” said Rodriguez in a telephone interview with the Venezuelan state TV channel VTV.
Rodriguez went on to explain that the contract forced Citgo to purchase non-Venezuelan crude that it would refine and sell to 7-Eleven at a very low price. “We were losing money,” added Rodriguez.
Headlines in a wide variety of U.S. news outlets reported yesterday and today that the decision to cancel the Citgo contract was made by 7-Eleven.
For example, the Los Angeles Times announced, “7-Eleven Dumps Venezuela-Backed Citgo to Pump Own Brand.” Others, such as Associated Press, had a headline that read, “7-Eleven Drops Citgo As Gas Supplier"
7-Eleven spokeswoman Margaret Chabris was apparently the main source for creating the impression that it was 7-Eleven’s decision to drop Citgo and not the other way around. Chabris told the Associated Press, “Certainly Chavez's position and statements over the past year or so didn't tempt us to stay with Citgo.”
Citgo CEO Rodriguez announced that his company would demand from 7-Eleven that it clarify its participation in creating the impression that decision to discontinue the sale of Citgo gas was its decision and was politically motivated.
The LA Times also quoted Tom Kloza, the chief oil analyst at the Oil Price Information Service as saying that 7-Eleven’s public break with Citgo “was opportunistic.” “When we were writing about this awhile ago … they were very quiet about it and there was no fanfare,” he added.
Last July Citgo had announced that it would discontinue supplying 1,300 gas station in the U.S. because its supply contracts with these were detrimental to the company’s bottom line.
According to the company, it had to purchase 130,000 barrels of gasoline per day from outside its own refinery network because the stations were too far from Citgo refineries. Instead, Citgo intended to supply only gas stations located near its own refineries, which are based mostly in the country’s Northeast, South, and Midwest.
See also July '06 article: Venezuela Cuts Supply to Some Citgo Gas Stations, for Greater Efficiency