Cities Service period The company traces its heritage back to the early 1900s and oil entrepreneur
Henry Latham Doherty. After quickly climbing the ladder of success in the manufactured gas and
electric utility world, Doherty in 1910 created
Cities Service Gas Development Company, a West Virginia corporation, 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. Thus, gas could be conveniently and inexpensively withdrawn during peak demand times. In 1931, Cities Service completed the
Natural Gas Pipeline Company of America, the nation's first long-distance high-pressure natural gas transportation system, a 24-inch pipeline 1,000 miles long from
Amarillo, Texas, to
Chicago. 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, Kansas in the
Mid-Continent oil province a year later. In 1928, a Cities Service subsidiary,
Indian Territory Illuminating Oil Company, discovered the
Oklahoma City Oil Field, one of the world's largest. Another participated in the discovery of the
East Texas Oil 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 was 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. 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
Lake Charles, Louisiana, which would 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 groundbreaking. A month before Allied troops landed in
France, it was turning out enough 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. In the years that followed, Cities Service grew into a fully diversified oil and gas company with global operations. Its green, expanding circle marketing logo became a familiar sight across much of the nation. During this time CEOs such as
W. Alton Jones and
Burl S. Watson ran the company. Cities Service Company 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 (now
7-Eleven Inc.).
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. Ironically, two years later, Gulf Oil itself would collapse as a result of a Pickens-initiated takeover attempt. 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.
Venezuelan ownership Fifty percent of Citgo was sold to
Petróleos de Venezuela, S.A. (PDVSA) in 1986, which acquired the remainder in 1990, resulting in the current ownership structure. In September 2010, in connection with the centennial of its original owner, Cities Service Company, Citgo unveiled a new retail design. Within five years, Citgo planned for all locations to display the new street image. With full ownership of Citgo, PDVSA at its peak controlled 10% of the US domestic oil market, creating a lucrative export chain from Venezuelan oil to American consumers, as the two largest buyers of Venezuelan petroleum are the United States and
China, respectively.In October 2010, then
President of Venezuela,
Hugo Chávez, announced the intention to have PDVSA sell its Citgo subsidiary calling it a "bad business" and citing low profits since 2006. The minimum sale price was set at 10 billion US dollars; however, PDVSA has been unable to find a buyer at that price. It was confirmed in January 2015 that Citgo would not be sold, but rather bonds were sold by Citgo to give a dividend to PDVSA. The Bonds sold included a $1.5bn five-year bond and a $1.3bn term loan to be fully repaid in three and a half years. In a 2016 deal, Venezuela pledged 49.9% of Citgo to Russian oil firm
Rosneft as collateral for a $1.5 billion loan. Both Republicans and Democrats in the United States urged oversight on this deal, describing Citgo's sale to Russia as a risk to the national security of the United States. Although granted house arrest in Venezuela in December 2019, the six men were transferred to harsher conditions in
El Helicoide prison following U.S. President Donald Trump's hosting of opposition leader Juan Guaido at the
2020 State of the Union Address. Amid the COVID-19 pandemic, U.S. Secretary of State Mike Pompeo called for their release on humanitarian grounds, stating that they were "wrongfully detained" and that they had been incarcerated without evidence presented against them for over two years. On March 9, 2022, one of the Citgo Six was released following a visit by US officials, including US Ambassador to Venezuela
James B. Story, to Venezuela, where they met with Venezuelan President
Nicolás Maduro. Later that year, on October 1, the remaining five members of the Citgo Six were released following a
prisoner exchange. Other Venezuelan oil executives were arrested in what
Bloomberg News described as a "purge" designed to bolster more economic power behind the President of Venezuela, Nicolás Maduro.
Asdrúbal Chávez, cousin of late Venezuelan president Hugo Chávez, was chosen as president of Citgo in November 2017. Citgo also has a much earlier connection to Venezuela, dating to the turn of the 20th century. Predecessor Warner-Quinley Asphalt's principal business was competition to the "Asphalt Trust" by means of a bitumen resources concession it held in Venezuela. The destabilized economy resulted in
hyperinflation, an
economic depression,
shortages in Venezuela and drastic increases in poverty, disease, child mortality, malnutrition, and crime. As a result of the crisis, Venezuela's debt to
China and
Russia – two political allies – increased. Due to the financial burden of this debt, Venezuela offered Citgo as collateral for Russian debt in 2016, raising the possibility that the Russian government could own Citgo due to
Venezuela's high risk of default.
2019 U.S. sanctions On January 28, 2019, the
U.S. Government imposed sanctions on PDVSA, freezing its assets in the U.S., and barring any U.S. firms and citizens from doing business with it. In February, Citgo cut ties with the PdVSA, and halted payments to them, placing them in a "blocked account". However, the sanctions limited Citgo's ability to refinance debt. In March, at the behest of the
U.S. Treasury, 35 financial institutions secured a $1.2 billion loan to fund Citgo's daily operations and refinancing, allaying concerns about Citgo's ability to continue operating in the U.S. On June 6, 2019, the U.S. Treasury expanded the sanctions, clarifying that exports of
diluents to Venezuela could be subject to sanctions.
2020 bond In 2020, Citgo borrowed money in the form of a bond, and used 50.1% of the company's equity as collateral. If the bond is not repaid, the institutional investors that lent the money will obtain ownership of the 50.1%.
Possible bankruptcy In May 2024, Bloomberg reported that opposition-appointed executives of Petroleos de Venezuela were considering placing Citgo into
Chapter 11 bankruptcy protection to slow down or completely block the sale of oil assets under the company's control. The opposition's plan would help it retain control of its most important overseas asset, which is up for auction.
Legal action against Citgo On May 30, 2024, two former Citgo executives who were imprisoned by the Venezuelan government, sued Citgo for over $400 million, claiming that their imprisonment was a conspiracy and was wrongful, refused to keep them protected from harm, and increased emotional distress on both of them.
Sale In November 2025,
Elliott Investment Management affiliate Amber Energy purchased Citgo's parent PDV holdings in a court-ordered auction for $5.9 billion. Venezuela rejected the legitimacy of the sale, with Vice President
Delcy Rodriguez calling it "fraudulent". ==Controversies==