<PAGE>

================================================================================

                                  United States

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                                   FORM 10-Q/A


       [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

                                       OR

       [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934
          For the transition period from ____________ to ____________

                         COMMISSION FILE NUMBER 1-14380

                           CITGO PETROLEUM CORPORATION
          ------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           DELAWARE                                      73-1173881
           --------                                      ----------
(State or other jurisdiction of           (I. R. S. Employer Identification No.)
incorporation or organization)

         ONE WARREN PLACE, 6100 SOUTH YALE AVENUE, TULSA, OKLAHOMA 74136
        -----------------------------------------------------------------
        (Address of principal executive office)               (Zip Code)

                                 (918) 495-4000
            ---------------------------------------------------------
              (Registrant's telephone number, including area code)

                                      N. A.
        -----------------------------------------------------------------
         (Former name, former address and former fiscal year, if changed
                               since last report)

           Indicate by check mark whether the registrant (1) has filed
         all reports required to be filed by Section 13 or 15(d) of the
         Securities Exchange Act of 1934 during the preceding 12 months
         (or for such shorter period that the registrant was required to
           file such reports), and (2) has been subject to such filing
                 requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
             described in Rule 12b-2 of the Act): Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of
               common stock, as of the latest practicable date.

      COMMON STOCK, $1.00 PAR VALUE                           1,000
      -----------------------------                           -----
                (Class)                          (outstanding at April 30, 2003)

================================================================================

<PAGE>

CITGO PETROLEUM CORPORATION

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                          PAGE
<S>                                                                                                       <C>
FACTORS AFFECTING FORWARD LOOKING STATEMENTS...........................................................     1

PART I. FINANCIAL INFORMATION

 Item 1. Financial Statements (Unaudited)

         Condensed Consolidated Balance Sheets - March 31, 2003 and
         December 31, 2002.............................................................................     2

         Condensed Consolidated Statements of Income and Comprehensive Income -
         Three-Month Periods Ended March 31, 2003 and 2002.............................................     3

         Condensed Consolidated Statement of Shareholder's Equity - Three-Month Period
         Ended March 31, 2003..........................................................................     4

         Condensed Consolidated Statements of Cash Flows - Three-Month Periods Ended
         March 31, 2003 and 2002.......................................................................     5

         Notes to the Condensed Consolidated Financial Statements......................................     6

 Item 2. Management's Discussion and Analysis of Financial Condition and
         Results of Operations.........................................................................    17

 Item 3. Quantitative and Qualitative Disclosures About Market Risk....................................    24

 Item 4. Controls and Procedures.......................................................................    29

PART II. OTHER INFORMATION

 Item 1. Legal Proceedings.............................................................................    30

 Item 6. Exhibits and Reports on Form 8-K..............................................................    30

SIGNATURES.............................................................................................    32

CERTIFICATIONS
</TABLE>

<PAGE>

                  FACTORS AFFECTING FORWARD LOOKING STATEMENTS

         This Report contains "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Specifically, all statements under
the caption "Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations" pertaining to capital expenditures and
investments related to environmental compliance, strategic planning, purchasing
patterns of refined products and capital resources available to CITGO Petroleum
Corporation ("CITGO", "our Company", "we", "us", "our", or similar references)
are forward looking statements. In addition, when used in this document, the
words "anticipate," "estimate," "project," "believe" and similar expressions are
used to identify forward looking statements.

         Those forward looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from the forward looking
statements. Those risks and uncertainties include changes in the availability
and cost of crude oil, feedstocks, blending components and refined products;
changes in prices or demand for our products as a result of competitive actions
or economic factors; changes in environmental and other regulatory requirements,
which may affect operations, operating costs and capital expenditure
requirements; costs and uncertainties associated with technological change and
implementation; inflation; and continued access to capital markets and
commercial bank financing on favorable terms. In addition, we purchase a
significant portion of our crude oil requirements from Petroleos de Venezuela,
S.A. (as defined herein), our ultimate parent corporation, under long-term
supply agreements, and could be adversely affected by social, economic and
political conditions in Venezuela. (See Exhibit 99.4 to the Form 8-K filed by
CITGO on February 25, 2003 for additional information concerning risk factors).

         Readers are cautioned not to place undue reliance on these forward
looking statements, which speak only as of the date of this Report. We undertake
no obligation to publicly release any revision to these forward looking
statements to reflect events or circumstances after the date of this Report.

                                       1

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CITGO PETROLEUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                     MARCH 31,     DECEMBER 31,
                                                                                        2003          2002
                                                                                    (UNAUDITED)
                                                                                    ---------------------------
<S>                                                                                 <C>            <C>
ASSETS

CURRENT ASSETS:
 Cash and cash equivalents                                                          $   481,189    $    33,025
 Accounts receivable, net                                                             1,035,596        905,178
 Due from affiliates                                                                     99,354         93,615
 Inventories                                                                            854,261      1,090,915
 Prepaid expenses and other                                                              66,950         64,767
                                                                                    -----------    -----------
       Total current assets                                                           2,537,350      2,187,500

PROPERTY, PLANT AND EQUIPMENT - Net                                                   3,780,582      3,750,166

RESTRICTED CASH                                                                          23,522         23,486

INVESTMENTS IN AFFILIATES                                                               676,452        716,469

OTHER ASSETS                                                                            322,843        309,291
                                                                                    -----------    -----------

                                                                                    $ 7,340,749    $ 6,986,912
LIABILITIES AND SHAREHOLDER'S EQUITY                                                ===========    ===========

CURRENT LIABILITIES:
 Accounts payable                                                                   $   507,470    $   830,769
 Payables to affiliates                                                                 547,379        417,634
 Taxes other than income                                                                220,985        229,072
 Other                                                                                  262,715        283,428
 Income taxes payable                                                                   114,110         24,770
 Current portion of long-term debt                                                       31,364        190,664
 Current portion of capital lease obligation                                             22,713         22,713
                                                                                    -----------    -----------
       Total current liabilities                                                      1,706,736      1,999,050

LONG-TERM DEBT                                                                        1,561,520      1,109,861

CAPITAL LEASE OBLIGATION                                                                 24,251         24,251

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS                                             266,506        247,762

OTHER NONCURRENT LIABILITIES                                                            215,450        211,950

DEFERRED INCOME TAXES                                                                   867,336        834,880

SHAREHOLDER'S EQUITY:
 Common stock - $1.00 par value, 1,000 shares authorized, issued and outstanding              1              1
 Additional capital                                                                   1,659,698      1,659,698
 Retained earnings                                                                    1,064,925        925,114
 Accumulated other comprehensive loss                                                   (25,674)       (25,655)
                                                                                    -----------    -----------
       Total shareholder's equity                                                     2,698,950      2,559,158
                                                                                    -----------    -----------

                                                                                    $ 7,340,749    $ 6,986,912
                                                                                    ===========    ===========
</TABLE>

See notes to condensed consolidated financial statements.

                                       2

<PAGE>

CITGO PETROLEUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                      THREE MONTHS
                                                                     ENDED MARCH 31,
                                                                     ---------------
                                                                  2003           2002
                                                                  ----           ----
<S>                                                            <C>            <C>
REVENUES:

 Net sales                                                     $ 6,227,716    $ 3,622,355
 Sales to affiliates                                               147,965         49,067
                                                               -----------    -----------
                                                                 6,375,681      3,671,422
 Equity in earnings of affiliates                                   13,624         18,934
 Insurance recoveries                                              117,714         94,706
 Other income (expense) - net                                       14,898         (6,501)
                                                               -----------    -----------
                                                                 6,521,917      3,778,561

COST OF SALES AND EXPENSES:

 Cost of sales and operating expenses (including purchases
   of $2,041,581 and $1,238,848 from affiliates)                 6,205,790      3,708,903
 Selling, general and administrative expenses                       73,344         76,387
 Interest expense, excluding capital lease                          23,008         15,723
 Capital lease interest charge                                       1,321          1,893
                                                               -----------    -----------
                                                                 6,303,463      3,802,906
                                                               -----------    -----------

INCOME (LOSS) BEFORE INCOME TAXES                                  218,454        (24,345)

INCOME TAXES (BENEFIT)                                              78,643         (8,764)
                                                               -----------    -----------

NET INCOME (LOSS)                                                  139,811        (15,581)
                                                               -----------    -----------
OTHER COMPREHENSIVE (LOSS) INCOME:
 Cash flow hedges:

   Reclassification adjustment for derivative losses included
   in net income, net of related income taxes of $43 and $44            77             78

 Foreign currency translation loss, net of related
  income taxes of $(54)                                                (96)             -
                                                               -----------    -----------
OTHER COMPREHENSIVE (LOSS) INCOME                                      (19)            78
                                                               -----------    -----------

COMPREHENSIVE INCOME (LOSS)                                    $   139,792    $   (15,503)
                                                               ===========    ===========
</TABLE>

See notes to condensed consolidated financial statements.

                                       3

<PAGE>

CITGO PETROLEUM CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY (UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                     ACCUMULATED
                                                                                        OTHER
                                   COMMON STOCK           ADDITIONAL    RETAINED    COMPREHENSIVE
                               SHARES        AMOUNT        CAPITAL      EARNINGS     INCOME (LOSS)     TOTAL
                               ------        ------      -----------   -----------  --------------  -----------
<S>                            <C>           <C>         <C>           <C>          <C>             <C>
BALANCE, DECEMBER 31, 2002       1           $    1      $ 1,659,698   $   925,114   $   (25,655)   $ 2,559,158

Net income                       -                -                -       139,811             -        139,811

Other comprehensive loss         -                -                -             -           (19)           (19)
                                --           ------      -----------   -----------   -----------    -----------
BALANCE, MARCH 31, 2003          1           $    1      $ 1,659,698   $ 1,064,925   $   (25,674)   $ 2,698,950
                                ==           ======      ===========   ===========   ===========    ===========
</TABLE>

See notes to condensed consolidated financial statements.

                                       4

<PAGE>

CITGO PETROLEUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   THREE MONTHS
                                                                  ENDED MARCH 31,
                                                                  ---------------
                                                                 2003        2002
                                                              ---------    ---------
<S>                                                           <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES                          $ 299,591    $  57,512
                                                              ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures                                           (90,425)    (120,510)
 Proceeds from sales of property, plant and equipment             1,582          276
 Increase in restricted cash                                        (37)           -
 Investments in LYONDELL-CITGO Refining LP                      (14,900)     (15,400)
 Investments in and advances to other affiliates                 (1,250)      (2,967)
                                                              ---------    ---------
        Net cash used in investing activities                  (105,030)    (138,601)
                                                              ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Net proceeds from short-term bank loans                              -       90,000
 Net repayments of revolving bank loans                        (279,300)     (66,500)
 Payments on loans from affiliates                              (29,500)           -
 Proceeds from senior notes due 2011                            546,590            -
 Proceeds from senior secured term loan                         200,000            -
 (Payments on) proceeds from issuance of tax-exempt bonds       (75,000)      25,000
 Payments on taxable bonds                                            -      (25,000)
 Payments on master shelf agreement senior notes                (50,000)     (25,000)
 Repurchase of senior notes due 2006                            (47,500)           -
 Debt issuance costs                                            (11,687)           -
                                                              ---------    ---------
        Net cash provided by (used in) financing activities     253,603       (1,500)
                                                              ---------    ---------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                448,164      (82,589)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                   33,025      104,362
                                                              ---------    ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                      $ 481,189    $  21,773
                                                              =========    =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 Cash (received) paid during the period for:
     Interest, net of amounts capitalized                     $   9,230    $   9,391
                                                              =========    =========
     Income taxes (net of refund of $50,000 in 2002)          $ (45,801)   $ (45,561)
                                                              =========    =========
</TABLE>

See notes to condensed consolidated financial statements.

                                       5

<PAGE>

CITGO PETROLEUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE-MONTH PERIODS ENDED MARCH 31, 2003 AND 2002

1.   BASIS OF PRESENTATION

     The financial information for CITGO Petroleum Corporation ("CITGO" or "the
     Company") subsequent to December 31, 2002 and with respect to the interim
     three-month periods ended March 31, 2003 and 2002 is unaudited. In
     management's opinion, such interim information contains all adjustments,
     consisting only of normal recurring adjustments, necessary for a fair
     presentation of the results of such periods. The results of operations for
     the three-month periods ended March 31, 2003 and 2002 are not necessarily
     indicative of the results to be expected for the full year. Reference is
     made to CITGO's Annual Report for the fiscal year ended December 31, 2002
     on Form 10-K, dated March 21, 2003, for additional information.


     In January 2003, the Financial Accounting Standards Board ("FASB") issued
     Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN
     46"), which clarifies the application of Accounting Research Bulletin No.
     51, "Consolidated Financial Statements." FIN 46 defines variable interest
     entities and how an enterprise should assess its interests in a variable
     interest entity to decide whether to consolidate that entity. The
     interpretation requires certain minimum disclosures with respect to
     variable interest entities in which an enterprise holds significant
     variable interest but which it does not consolidate. FIN 46 applies
     immediately to variable interest entities created after January 31, 2003,
     and to variable interest entities in which an enterprise obtains an
     interest after that date. It applies in the first fiscal year or interim
     period beginning after June 15, 2003 to variable interest entities in which
     an enterprise holds a variable interest that it acquired before February 1,
     2003. FIN 46 applies to public enterprises as of the beginning of the
     applicable interim or annual period, and it applies to nonpublic
     enterprises as of the end of the applicable annual period. FIN 46 may be
     applied prospectively with a cumulative-effect adjustment as of the date on
     which it is first applied or by restating previously issued financial
     statements for one or more years with a cumulative-effect adjustment as of
     the beginning of the first year restated. CITGO expects that the
     application of FIN 46 to variable interest entities in which it acquired an
     interest before February 1, 2003 will not have a material impact on its
     financial position or results of operations.


     On January 1, 2003 the Company adopted Statement of Financial Accounting
     Standards No. 143, "Accounting for Asset Retirement Obligations" (SFAS No.
     143) which addresses financial accounting and reporting for obligations
     associated with the retirement of tangible long-lived assets and the
     associated asset retirement costs. It applies to legal obligations
     associated with the retirement of long-lived assets that result from the
     acquisition, construction, development and/or the normal operation of a
     long-lived asset, except for certain obligations of lessees. The Company
     has identified certain asset retirement obligations that are within the
     scope of the standard, including obligations imposed by certain state laws
     pertaining to closure and/or removal of storage tanks, contractual removal
     obligations included in certain easement and right-of-way agreements
     associated with the Company's pipeline operations, and contractual removal
     obligations relating to a refinery processing unit located within a
     third-party entity's facility. The Company cannot currently determine a
     reasonable estimate of the fair value of its asset retirement obligations
     due to the fact that the related assets have indeterminate useful lives
     which preclude development of assumptions about the potential timing of
     settlement dates. Such obligations will be recognized in the period in
     which sufficient information exists to estimate a range of potential
     settlement dates. Accordingly, the adoption of SFAS No. 143 did not impact
     the Company's financial position or results of operations.

                                       6

<PAGE>

2.   ACCOUNTS RECEIVABLE

     Credit rating downgrades from the three major rating agencies during
     January 2003, caused a termination event under CITGO's accounts receivables
     sale facility existing at that time, which ultimately led to the repurchase
     of $125 million in accounts receivable and cancellation of the facility on
     January 31, 2003. That facility had a maximum size of $225 million, of
     which $125 million was used at the time of cancellation. On February 28,
     2003, a new accounts receivable sales facility was established. This
     facility allows for the non-recourse sale of certain accounts receivable to
     independent third parties. A maximum of $200 million in accounts receivable
     may be sold at any one time.

3.   INVENTORIES

     Inventories, primarily at LIFO, consist of the following:

<TABLE>
<CAPTION>
                          MARCH 31,  DECEMBER 31,
                            2003        2002
                        (UNAUDITED)
                        -----------  ------------
                             (000s OMITTED)
<S>                     <C>          <C>
Refined products         $  587,291   $  781,495
Crude oil                   178,770      221,422
Materials and supplies       88,200       87,998
                         ----------   ----------

                         $  854,261   $1,090,915
                         ==========   ==========
</TABLE>

                                       7

<PAGE>

4.   LONG-TERM DEBT AND FINANCING ARRANGEMENTS

<TABLE>
<CAPTION>
                                                                MARCH 31,     DECEMBER 31,
                                                                  2003            2002
                                                               (UNAUDITED)
                                                               -----------    -----------
                                                                     (000s OMITTED)
<S>                                                            <C>            <C>
Revolving bank loans                                           $         -    $   279,300

Senior Secured Term Loan                                           200,000              -

Senior Notes, $200 million face amount, due 2006 with
  interest rate of 7-7/8%                                          149,929        199,898

Senior Notes, $550 million face amount, due 2011 with
  interest rate of 11-3/8%                                         546,626              -

Private Placement Senior Notes, due 2003 to 2006 with
  interest rate of 9.30%                                            45,455         45,455

Master Shelf Agreement Senior Notes, due 2003 to
  2009 with interest rates from 7.17% to 8.94%                     185,000        235,000

Tax Exempt Bonds, due 2004 to 2032 with variable
  and fixed interest rates                                         350,874        425,872

Taxable Bonds, due 2026 to 2028 with variable interest rates       115,000        115,000
                                                               -----------    -----------
                                                                 1,592,884      1,300,525
Current portion of long-term debt                                  (31,364)      (190,664)
                                                               -----------    -----------

                                                               $ 1,561,520    $ 1,109,861
                                                               ===========    ===========
</TABLE>

     CITGO's revolving bank loan agreements with various banks consist of (i) a
     $260 million, three-year, revolving bank loan, maturing in December 2005;
     (ii) a $260 million, 364-day, revolving bank loan, maturing in December
     2003; and (iii) a $25 million, 364-day, revolving bank loan, maturing in
     May 2003. The $25 million revolving bank loan, expiring in May 2003, will
     not be renewed. CITGO intends to replace both of the $260 million revolving
     bank loans when they mature.

     On May 3, 2002, CITGO issued $7.7 million of tax exempt environmental
     facilities revenue bonds due 2032. On June 28, 2002, CITGO issued $30
     million of tax exempt environmental facilities revenue bonds due 2032. The
     proceeds from both of these issuances will be used for capital projects at
     the Lemont refinery. Restricted cash of $24 million at March 31, 2003
     represents highly liquid investments held in trust accounts in accordance
     with these bond agreements. Funds are released solely for financing the
     qualified capital expenditures as defined in the bond agreements. CITGO
     repurchased the $7.7 million of tax exempt bonds in May of 2003.

     On February 27, 2003, CITGO closed on a three year $200 million, senior
     secured term loan. Security is provided by CITGO's 15.8 percent equity
     interest in Colonial Pipeline and 6.8 percent equity interest in Explorer
     Pipeline.

     On February 27, 2003 CITGO issued $550 million aggregate principal amount
     of 11-3/8 percent unsecured senior notes due February 1, 2011. In
     connection with this debt issuance, CITGO redeemed $50 million principal
     amount of its Senior Notes due 2006.

                                        8
<PAGE>

     The tax-exempt bonds are supported by letters of credit. Some of the
     providers of these letters of credit indicated they would not renew such
     letters of credit. As a result, CITGO repurchased tax-exempt bonds that
     were supported by these letters of credit in the amounts of $75 million in
     March 2003, $25 million in April 2003 and approximately $8 million in May
     2003.

5.   INVESTMENT IN LYONDELL-CITGO REFINING LP


     LYONDELL-CITGO Refining LP ("LYONDELL-CITGO") owns and operates a 265
     thousand barrels per day ("MBPD") refinery in Houston, Texas and is owned
     by subsidiaries of CITGO (41.25%) and Lyondell Chemical Company (58.75%)
     ("the Owners"). This refinery processes heavy crude oil supplied by PDVSA
     under a long-term supply contract that expires in 2017. CITGO purchases
     substantially all of the gasoline, diesel and jet fuel produced at the
     refinery under a long-term contract.



     In April 1998, in February 1999 through October 2000 and in February 2001
     through March 2003 PDVSA, pursuant to its contractual rights, declared
     force majeure and reduced deliveries of crude oil to LYONDELL-CITGO; this
     required LYONDELL-CITGO to obtain alternative sources of crude oil supply
     in replacement, which resulted in lower operating margins. Most recently,
     LYONDELL-CITGO received notice of force majeure from PDVSA in December
     2002. Crude oil was purchased in the spot market to replace the volume not
     delivered under the contract during December 2002. By February 2003, crude
     oil deliveries had returned to contract volumes and the force majeure was
     lifted March 6, 2003.


     CITGO has a note receivable from LYONDELL-CITGO which totals $35 million at
     March 31, 2003 and December 31, 2002. The note bears interest at market
     rates. Principal and interest are due in December 2004. Accordingly, this
     note is included in the balance sheet caption other assets in the
     accompanying consolidated balance sheets.

                                        9

<PAGE>

     CITGO accounts for its investment in LYONDELL-CITGO using the equity method
     of accounting and records its share of the net earnings of LYONDELL-CITGO
     based on allocations of income agreed to by the Owners which differ from
     participation interests. Cash distributions are allocated to the Owners
     based on participation interest. Information on CITGO's investment in
     LYONDELL-CITGO follows:

<TABLE>
<CAPTION>
                                                            (000s omitted)
                                                        March 31,   December 31,
                                                          2003          2002
                                                       ----------   ------------
                                                       (Unaudited)
<S>                                                    <C>          <C>
Carrying value of investment                           $  480,052    $  518,279
Notes receivable                                           35,278        35,278
Participation interest                                         41%           41%

Summary of LYONDELL-CITGO's financial position:
  Current assets                                       $  271,000    $  357,000
  Non current assets                                    1,365,000     1,400,000
  Current liabilities:
     Distributions payable to partners                     74,000       181,000
     Other                                                298,000       333,000
  Noncurrent liabilities (including debt of $450,000
   at March 31, 2003 and December 31, 2002)               841,000       840,000
  Partners' capital                                       423,000       403,000
</TABLE>

<TABLE>
<CAPTION>
                                                  Three Months Ended March 31,
                                                  ----------------------------
                                                       2003         2002
                                                    ----------   ----------
                                                          (Unaudited)
<S>                                                 <C>          <C>
Equity in net income                                $    9,110   $   14,438
Cash distribution received                              62,238       16,715

Summary of LYONDELL-CITGO's operating results:
  Revenue                                           $1,183,128   $  706,718
  Gross profit                                          49,664       60,312
  Net income                                            28,180       41,297
</TABLE>

     On December 11, 2002, LYONDELL-CITGO completed a refinancing of its working
     capital revolver and its term bank loan. The new term loan and working
     capital revolver will mature in June 2004.

                                       10

<PAGE>

6.   COMMITMENTS AND CONTINGENCIES

     LITIGATION AND INJURY CLAIMS - Various lawsuits and claims arising in the
     ordinary course of business are pending against the Company. The Company
     records accruals for potential losses when, in management's opinion, such
     losses are probable and reasonably estimable. If known lawsuits and claims
     were to be determined in a manner adverse to the Company, and in amounts
     greater than the Company's accruals, then such determinations could have a
     material adverse effect on the Company's results of operations in a given
     reporting period. The most significant lawsuits and claims are discussed
     below.

     The Company settled a lawsuit against PDVMR and CITGO in Illinois state
     court which claimed damages as a result of PDVMR invoicing a partnership in
     which it is a partner, and an affiliate of the other partner of the
     partnership, allegedly excessive charges for electricity utilized by these
     entities' facilities located adjacent to the Lemont, Illinois refinery. The
     electricity supplier to the refinery is seeking recovery from the Company
     of alleged underpayments for electricity. The Company has denied all
     allegations and is pursuing its defenses.

     In September 2002, a state District Court in Corpus Christi, Texas has
     ordered the Company to pay property owners and their attorneys
     approximately $6 million based on alleged settlement of class action
     property damage claims as a result of alleged air, soil and groundwater
     contamination from emissions released from the Company's Corpus Christi,
     Texas refinery. CITGO will appeal the ruling to the Texas Court of Appeals.

     CITGO is one of several refinery defendants to state and federal lawsuits
     in New York and state actions in Illinois and California alleging
     contamination of water supplies by methyl tertiary butyl ether ("MTBE"), a
     component of gasoline. The plaintiffs claim that MTBE is a defective
     product and that refiners failed to adequately warn customers and the
     public about risks associated with the use of MTBE in gasoline. These
     actions allege that MTBE poses public health risks and seek testing,
     damages and remediation of the alleged contamination. The plaintiffs filed
     putative class action lawsuits in federal courts in Illinois, California,
     Florida and New York. CITGO was named as a defendant in all but the
     California case. The federal cases were all consolidated in a Multidistrict
     Litigation case in the United States District Court for the Southern
     District of New York ("MDL"). In July 2002, the court in the MDL case
     denied plaintiffs' motion for class certification. The California
     plaintiffs in the MDL action then dismissed their federal lawsuit and
     refiled in state court in California. Subsequently, the remaining MDL
     plaintiffs settled with the Company and its codefendants for an amount that
     does not have a material impact on CITGO's financial condition or results
     of operations. The Company anticipates a similar settlement of the
     California lawsuit. In August 2002, a New York state court judge handling
     two separate but related individual MTBE lawsuits dismissed plaintiffs'
     product liability claims, leaving only traditional nuisance and trespass
     claims for leakage from underground storage tanks at gasoline stations near
     plaintiffs' water wells. Subsequently, a putative class action involving
     the same leaking underground storage tanks has been filed. CITGO
     anticipates filing a motion to dismiss the product liability claims and
     will also oppose class certification. Also, in late October 2002, The
     County of Suffolk, New York, and the Suffolk County Water Authority filed
     suit in state court, claiming MTBE contamination of that county's water
     supply. The Illinois state action has been brought on behalf of a class of
     contaminated well owners in Illinois and a second class of all well owners
     within a defined distance of leaking underground storage tanks. The judge
     in the Illinois state court action is expected to hear plaintiffs' motion
     for class certification in that case sometime within the next year.

     In August 1999, the U.S. Department of Commerce rejected a petition filed
     by a group of independent oil producers to apply antidumping measures and
     countervailing duties against imports of crude oil from Venezuela, Iraq,
     Mexico and Saudi Arabia. The petitioners appealed this decision before the
     U.S. Court of International Trade based in New York. On September 19, 2000,
     the Court of International Trade

                                       11

<PAGE>

     remanded the case to the Department of Commerce with instructions to
     reconsider its August 1999 decision. The Department of Commerce was
     required to make a revised decision as to whether or not to initiate an
     investigation within 60 days. The Department of Commerce appealed to the
     U.S. Court of Appeals for the Federal Circuit, which dismissed the appeal
     as premature on July 31, 2001. The Department of Commerce issued its
     revised decision, which again rejected the petition, in August 2001. The
     revised decision was affirmed by the Court of International Trade on
     December 17, 2002. In February 2003, the independent oil producers appealed
     the decision of the Court of International Trade.

     CITGO has been named as a defendant in approximately 122 asbestos lawsuits
     pending in state and federal courts, primarily in Louisiana, Texas and
     Illinois. These cases, most of which involve multiple defendants, are
     brought by former employees or contractor employees seeking damages for
     asbestos related illnesses allegedly caused, at least in part, from
     exposure at refineries owned or operated by CITGO in Lake Charles,
     Louisiana, Corpus Christi, Texas and Lemont, Illinois. In many of these
     cases, the plaintiffs' alleged exposure occurred over a period of years
     extending back to a time before CITGO owned or operated the premises at
     issue. In some cases, CITGO is indemnified by or has the right to seek
     indemnification for losses and expenses that CITGO may incur from prior
     owners of the refineries or employers of the claimants. In other cases,
     including approximately 96 actions where CITGO has not been sued but prior
     owners of the CITGO refineries have been sued, these prior owners have
     asserted indemnification rights against CITGO. The Company does not believe
     that the resolution of these cases will have an adverse material effect on
     its financial condition or results of operations.


     ENVIRONMENTAL COMPLIANCE AND REMEDIATION - CITGO is subject to the federal
     Clean Air Act ("CAA") which includes the New Source Review ("NSR") program
     as well as the Title V air permitting program; the federal Clean Water Act
     which includes the National Pollution Discharge Elimination System program;
     the Toxic Substances Control Act; and the federal Resource Conservation and
     Recovery Act and their equivalent state programs. CITGO is required to
     obtain permits under all of these programs and believes it is in material
     compliance with the terms of these permits. CITGO does not have any
     material CERCLA liability because the former owners of many of CITGO's
     assets have by explicit contractual language assumed all or the material
     portion of CERCLA obligations related to those assets. This includes the
     Lake Charles refinery and the Lemont refinery.



     The U.S. refining industry is required to comply with increasingly
     stringent product specifications under the 1990 Clean Air Act Amendments
     for reformulated gasoline and low sulphur gasoline and diesel fuel that
     have necessitated additional capital and operating expenditures, and
     altered significantly the U.S. refining industry and the return realized on
     refinery investments. Also, regulatory interpretations by the U.S. EPA
     regarding "modifications" to refinery equipment under the NSR provisions of
     the CAA have created uncertainty about the extent to which additional
     capital and operating expenditures will be required and administrative
     penalties imposed.


     In addition, CITGO is subject to various other federal, state and local
     environmental laws and regulations that may require CITGO to take
     additional compliance actions and also actions to remediate the effects on
     the environment of prior disposal or release of petroleum, hazardous
     substances and other waste and/or pay for natural resource damages.
     Maintaining compliance with environmental laws and regulations could
     require significant capital expenditures and additional operating costs.
     Also, numerous other factors affect the Company's plans with respect to
     environmental compliance and related expenditures. See "Factors Affecting
     Forward Looking Statements."

     CITGO's accounting policy establishes environmental reserves as probable
     site restoration and remediation obligations become reasonably capable of
     estimation. CITGO believes the amounts provided in its consolidated
     financial statements, as prescribed by generally accepted accounting
     principles, are adequate in light of probable and estimable liabilities and
     obligations. However, there can be no assurance that the

                                       12

<PAGE>

     actual amounts required to discharge alleged liabilities and obligations
     and to comply with applicable laws and regulations will not exceed amounts
     provided for or will not have a material adverse affect on its consolidated
     results of operations, financial condition and cash flows.


     In 1992, the Company reached an agreement with the Louisiana Department of
     Environmental Quality ("LDEQ") to cease usage of certain surface
     impoundments at its Lake Charles refinery by 1994. A mutually acceptable
     closure plan was filed with the LDEQ in 1993. The Company and the former
     owner of the refinery are participating in the closure and sharing the
     related costs based on estimated contributions of waste and ownership
     periods. The remediation commenced in December 1993. In 1997, CITGO
     presented a proposal to the LDEQ revising the 1993 closure plan. In 1998
     and 2000, CITGO submitted further revisions as requested by the LDEQ. The
     LDEQ issued an administrative order in June 2002 that addressed the
     requirements and schedule for proceeding to develop and implement the
     corrective action or closure plan for these surface impoundments and
     related waste units. Compliance with the terms of the administrative order
     has begun. CITGO has incurred remediation costs to date related to these
     surface impoundments in the range of $40 to $50 million. Based on currently
     available information and proposed remedial approach, CITGO currently
     anticipates closure and post-closure costs related to these surface
     impoundments and related solid waste management units to range from $36
     million to $41 million.


     The Texas Commission on Environmental Quality ("TCEQ") conducted a two-day
     multi-media investigation of the Corpus Christi Refinery during 2002 and
     has issued a notice of enforcement to the Company identifying 31 items of
     alleged violations of Texas environmental regulations. CITGO anticipates
     that penalties will be proposed with respect to these matters, but no
     amounts have yet been specified.

     In March 2003, the TCEQ notified CITGO about a proposed penalty for failure
     to maintain equipment upset records, to obtain authority for certain sulfur
     dioxide and hydrogen sulfide emissions and to comply with certain air
     limitations at its Corpus Christi refinery during 2000 and 2001. CITGO
     disputes these findings and has appealed the proposed penalty.

     In June 1999, CITGO and numerous other industrial companies received notice
     from the U.S. EPA that the U.S. EPA believed that CITGO and these other
     companies have contributed to contamination in the Calcasieu Estuary, in
     the proximity of Lake Charles, Calcasieu Parish, Louisiana and are
     potentially responsible parties ("PRPs") under the Comprehensive
     Environmental Response, Compensation, and Liability Act ("CERCLA"). The
     U.S. EPA made a demand for payment of its past investigation costs from
     CITGO and other PRPs and since 1999 has been conducting a remedial
     investigation/feasibility study ("RI/FS") under its CERCLA authority. The
     U.S. EPA released the draft of the remedial investigation phase of the
     report in early May 2003. CITGO and other PRPs may be potentially
     responsible for the costs of the RI/FS, subsequent remedial actions and
     natural resource damages. CITGO is reviewing the recent remedial
     investigation phase of the report and its implications. Meanwhile, the
     Company disagrees with the U.S. EPA's earlier allegations and still intends
     to contest this matter.

     In January and July 2001, CITGO received notices of violation ("NOVs") from
     the U.S. EPA alleging violations of the Clean Air Act. The NOVs are an
     outgrowth of an industry-wide and multi-industry U.S. EPA enforcement
     initiative alleging that many refineries and electric utilities modified
     air emission sources without obtaining permits or installing new control
     equipment under the NSR provisions of the Clean Air Act. The NOVs followed
     inspections and formal information requests regarding the Company's Lake
     Charles, Louisiana, Corpus Christi, Texas and Lemont, Illinois refineries.
     Since mid-2002, CITGO has been engaged in global settlement negotiations
     with the United States. The settlement negotiations have focused on
     different levels of air pollutant emission reductions and the merits of
     various types of control equipment to achieve those reductions. No
     settlement agreement, or agreement in principal, has been reached. Based
     primarily on the costs of control equipment reported by the United States
     and other

                                       13

<PAGE>

     petroleum companies and the types and number of emission control devices
     that have been agreed to in previous petroleum companies' NSR settlements
     with the United States, CITGO estimates that the capital costs of a
     settlement with the United States could range from $130 million to $200
     million. Any such capital costs would be incurred over a period of years,
     anticipated to be from 2003 to 2008. Also, this cost estimate range, while
     based on current information and judgment, is dependent on a number of
     subjective factors, including the types of control devices installed, the
     emission limitations set for the units, the year the technology may be
     installed, and possible future operational changes. The Company also may be
     subject to possible penalties. If settlement discussions fail, CITGO is
     prepared to contest the NOVs. If CITGO is found to have violated the
     provisions cited in the NOVs, it estimates the capital expenditures and
     penalties that might result could range up to $290 million, to be incurred
     over a period of years.

     In June 1999, an NOV was issued by the U.S. EPA alleging violations of the
     National Emission Standards for Hazardous Air Pollutants ("NESHAPS")
     regulations covering benzene emissions from wastewater treatment operations
     at the Company's Lemont, Illinois refinery. CITGO is in settlement
     discussions with the U.S. EPA. CITGO believes this matter will be
     consolidated with the matters described in the previous paragraph.

     In June 2002, a Consolidated Compliance Order and Notice of Potential
     Penalty was issued by the LDEQ alleging various violations of the Louisiana
     air quality regulations at CITGO's Lake Charles, Louisiana refinery. CITGO
     is in settlement discussions with the LDEQ.

     Various regulatory authorities have the right to conduct, and from time to
     time do conduct, environmental compliance audits of CITGO and its
     subsidiaries' facilities and operations. Those audits have the potential to
     reveal matters that those authorities believe represent non-compliance in
     one or more respects with regulatory requirements and for which those
     authorities may seek corrective actions and/or penalties in an
     administrative or judicial proceeding. Based upon current information,
     CITGO is not aware that any such audits or their findings have resulted in
     the filing of such a proceeding or is the subject of a threatened filing
     with respect to such a proceeding, nor does CITGO believe that any such
     audit or their findings will have a material adverse effect on its future
     business and operating results, other than matters described above.

     Conditions which require additional expenditures may exist with respect to
     the Company's various sites including, but not limited to, its operating
     refinery complexes, former refinery sites, service stations and crude oil
     and petroleum product storage terminals. Based on currently available
     information, CITGO cannot determine the amount of any such future
     expenditures.

     DERIVATIVE COMMODITY AND FINANCIAL INSTRUMENTS - As of March 31, 2003
     CITGO's petroleum commodity derivatives included exchange traded futures
     contracts, forward purchase and sale contracts, exchange traded and
     over-the-counter options and over-the-counter swaps. At March 31, 2003, the
     balance sheet captions prepaid expenses and other current assets and other
     current liabilities include $14 million and $24 million, respectively,
     related to the fair values of open commodity derivatives.

     CITGO has also entered into various interest rate swaps to manage the
     Company's risk related to interest rate changes on its debt. The fair value
     of the interest rate swap agreements in place at March 31, 2003, based on
     the estimated amount that the Company would receive or pay to terminate the
     agreements as of that date and taking into account current interest rates,
     was a loss of $3 million, the offset of which is recorded in the balance
     sheet caption other current liabilities. In connection with the
     determination of fair market value, the Company considered the
     creditworthiness of the counterparties, but no adjustment was determined to
     be necessary as a result.

                                       14

<PAGE>

     GUARANTEES - As of March 31, 2003, the Company has guaranteed the debt of
     others in a variety of circumstances including letters of credit issued for
     an affiliate, bank debt of an affiliate, bank debt of an equity investment,
     bank debt of customers and customer debt related to the acquisition of
     marketing equipment as shown in the following table:

<TABLE>
<CAPTION>
                                              (000s OMITTED)
<S>                                             <C>
Letters of credit                               $  32,979
Bank debt
   Affiliate                                       10,000
   Equity investment                                5,500
   Customers                                        4,471
Financing debt of customers
   Equipment acquisition                            2,556
                                                ---------
   Total                                        $  55,506
                                                =========
</TABLE>

     In each case, if the debtor fails to meet its obligation, CITGO would be
     obligated to make the required payment. The guarantees related to letters
     of credit, affiliate's bank debt and equity investment bank debt expire in
     2003. The guarantees related to customer bank debt expire between 2004 and
     2009. The guarantees related to financing debt associated with equipment
     acquisition by customers expire between 2003 and 2007. The Company has not
     recorded any amounts on the Company's balance sheet relating to these
     guarantees.

     In the event of debtor default on the letters of credit, CITGO has been
     indemnified by PDV Holding, Inc. ("PDV Holding"), the direct parent of PDV
     America. In the event of debtor default on the affiliate's and equity
     investment bank debt, CITGO has no recourse. In the event of debtor default
     on customer bank debt, CITGO generally has recourse to personal guarantees
     from principals or liens on property, except in one case, in which the
     guaranteed amount is $170 thousand, CITGO has no recourse. In the event of
     debtor default on financing debt incurred by customers, CITGO would receive
     an interest in the equipment being financed after making the guaranteed
     debt payment.

     CITGO has granted indemnities to the buyers in connection with past sales
     of product terminal facilities. These indemnities provide that CITGO will
     accept responsibility for claims arising from the period in which CITGO
     owned the facilities. Due to the uncertainties in this situation, the
     Company is not able to estimate a liability relating to these indemnities.

     The Company has not recorded a liability on its balance sheet relating to
     product warranties because historically, product warranty claims have not
     been significant.

7.   RELATED PARTY TRANSACTIONS

     CITGO purchases approximately one-half of the crude oil processed in its
     refineries from subsidiaries of PDVSA under long-term supply agreements.
     These supply agreements extend through the year 2006 for the Lake Charles
     refinery, 2010 for the Paulsboro refinery, 2012 for the Corpus Christi
     refinery and 2013 for the Savannah refinery.


     These crude supply agreements contain force majeure provisions which excuse
     the performance by either party of its obligations under the agreement
     under specified circumstances. As a result of Venezuela and



                                       15

<PAGE>

     other countries following production quotas established by the Organization
     of the Petroleum Exporting Countries, PDVSA invoked the force majeure
     provisions and reduced the volume of crude oil supplied under the contracts
     in April 1998, in February 1999 through October 2000 and in February 2001
     through March 2003. In one instance PDVSA noted operational and technical
     problems as the reason for the declaration. As a result of these
     declarations of force majeure, the Company was required to obtain crude oil
     from alternative sources, which resulted in increased volatility in its
     operating margins. The Company was notified that effective March 6, 2003,
     PDVSA ended its most recent declaration of force majeure under the crude
     oil supply agreements.


     In August 2002, three affiliates entered into agreements to advance excess
     cash to the Company from time to time under demand notes for amounts of up
     to a maximum of $10 million with PDV Texas, Inc. ("PDV Texas"), $30 million
     with PDV America and $10 million with PDV Holding. The notes bear interest
     at rates equivalent to 30-day LIBOR plus .875% payable quarterly. At March
     31, 2003, $9.5 million was outstanding on the note with PDV America which
     is included in payables to affiliates in the accompanying consolidated
     balance sheet.

     PDV America has a $500 million principal payment due in August 2003. PDV
     America holds a $500 million mirror note due from PDVSA which is designed
     to provide sufficient liquidity to PDV America to make this payment. While
     PDVSA's obligation remains unchanged, CITGO may pay a dividend of up to
     $500 million to PDV America to provide funds for the repayment of PDV
     America's notes due August 2003, if CITGO satisfies the conditions under
     the indenture governing its 11-3/8% senior notes to make such a dividend.

8.   INSURANCE RECOVERIES

     On August 14, 2001, a fire occurred at the crude oil distillation unit of
     the Lemont refinery. The crude unit was destroyed and the refinery's other
     processing units were temporarily taken out of production. A new crude unit
     was operational at the end of May 2002.

     On September 21, 2001, a fire occurred at the hydrocracker unit of the Lake
     Charles refinery. The hydrocracker unit was damaged and operations at other
     processing units were temporarily affected. Operation of the other refinery
     units returned to normal on October 16, 2001. Operations at the
     hydrocracker resumed on November 22, 2001.

     The Company recognizes property damage insurance recoveries in excess of
     the amount of recorded losses and related expenses, and business
     interruption insurance recoveries when such amounts are realized. During
     the three-month periods ended March 31, 2003 and 2002, the Company recorded
     $118 million and $95 million, respectively, of insurance recoveries related
     to these fires. The Company received cash proceeds of $47 million and $101
     million during the three-month periods ended March 31, 2003 and 2002. CITGO
     expects to recover additional amounts related to the Lemont refinery event
     subject to final settlement negotiations.

                                       16

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

         The following discussion of our financial condition and results of
operations should be read in conjunction with our unaudited condensed
consolidated financial statements included elsewhere herein. Reference is made
to our Annual Report for the fiscal year ended December 31, 2002 on Form 10-K,
dated March 21, 2003, for additional information and a description of critical
accounting policies and factors which may cause substantial fluctuations in our
earnings and cash flows.

         In the quarter ended March 31, 2003, we generated net income of $139.8
million on total revenue of $6.5 billion compared to a net loss of $15.6 million
on total revenue of $3.8 billion for the same period last year. (See "Gross
margin").

RESULTS OF OPERATIONS

         The following table summarizes the sources of our sales revenues and
sales volumes for the three-month periods ended March 31, 2003 and 2002:

<TABLE>
<CAPTION>
                                          THREE MONTHS             THREE MONTHS
                                         ENDED MARCH 31,          ENDED MARCH 31,
                                         ---------------          ---------------
                                          2003     2002           2003     2002
                                         ------   ------          -----    -----
                                         ($ in millions)       (gallons in millions)
<S>                                      <C>      <C>             <C>      <C>
Gasoline                                 $3,362   $2,110          3,366    3,340
Jet fuel                                    517      310            539      532
Diesel/#2 fuel                            1,668      758          1,725    1,319
Asphalt                                      70       41             92       77
Petrochemicals and industrial products      567      298            616      499
Lubricants and waxes                        142      130             66       59
                                         ---------------          --------------
    Total refined product sales           6,326    3,647          6,404    5,826
Other sales and adjustments                  50       24
                                         ---------------          --------------
    Total sales                          $6,376   $3,671          6,404    5,826
                                         ===============          ==============
</TABLE>

                                       17

<PAGE>

         The following table summarizes our cost of sales and operating expenses
for the three-month periods ended March 31, 2003 and 2002:

                   CITGO COST OF SALES AND OPERATING EXPENSES

<TABLE>
<CAPTION>
                                                         THREE MONTHS
                                                        ENDED MARCH 31,
                                                        ---------------
                                                         2003     2002
                                                        ------   ------
                                                        ($ in millions)
<S>                                                     <C>      <C>
Crude oil                                               $1,780   $  892
Refined products                                         3,506    2,130
Intermediate feedstocks                                    458      266
Refining and manufacturing costs                           314      283
Other operating costs, expenses and inventory changes      148      138
                                                        ------   ------
    Total cost of sales and operating expenses          $6,206   $3,709
                                                        ======   ======
</TABLE>

         Sales revenues and volumes. Sales increased $2.7 billion, or
approximately 74%, in the three-month period ended March 31, 2003 as compared to
the same period in 2002. This was due to an increase in average sales price of
58% and an increase in sales volume of 10%. (See CITGO Sales Revenues and
Volumes table above.)

         Equity in earnings of affiliates. Equity in earnings of affiliates
decreased by $5 million for the three-month period ended March 31, 2003 as
compared to the same period in 2002. The decrease was primarily due to the
decrease in the earnings of LYONDELL-CITGO, our share of which decreased $5
million from $14 million in the first quarter of 2002 to $9 million in the first
quarter of 2003.

         Insurance recoveries. The insurance recoveries of $118 million included
in the first quarter of 2003 and $95 million included in the first quarter of
2002 relate primarily to a fire which occurred on August 14, 2001 at the Lemont
refinery. The crude unit was destroyed and the refinery's other processing units
were temporarily taken out of production. These recoveries are, in part,
reimbursements for expenses incurred in 2002 and 2001 to mitigate the effect of
the fire on our earnings. We expect to recover additional amounts related to
this event subject to final settlement negotiations.

         Cost of sales and operating expenses. Cost of sales and operating
expenses increased by $2.5 billion or 67%, in the quarter ended March 31, 2003
as compared to the same period in 2002. PDVSA's reduction of deliveries of crude
oil related to its declaration of force majeure on its crude oil supply
agreements did not have a significant effect on the crude oil component of cost
of sales and operating expenses in the first quarter 2003 or 2002. (See CITGO
Cost of Sales and Operating Expenses table above.)

         We purchase refined products to supplement the production from our
refineries to meet marketing demands and resolve logistical issues. Refined
product purchases represented 56% of total cost of sales and operating expenses
for the first quarter 2003 and 57% for the first quarter of 2002. We estimate
margins on purchased products, on average, are lower than margins on produced
products due to the fact that we can only receive the marketing portion of the
total margin received on the produced refined products. However, purchased
products are not segregated from our produced products and margins may vary due
to market conditions and other factors

                                       18
<PAGE>

beyond our control. As such, it is not practical to measure the effects on
profitability of changes in volumes of purchased products. In the near term,
other than normal refinery turnaround maintenance, we do not anticipate
operational actions or market conditions which might cause a material change in
anticipated purchased product requirements; however, there could be events
beyond our control which impact the volume of refined products purchased. (See
also "Factors Affecting Forward Looking Statements".)

         Gross margin. The gross margin for the three-month period ended March
31, 2003 was approximately 2.7 cents per gallon, compared to a negative gross
margin of approximately (0.7) cents per gallon for the same period in 2002. The
revenue per gallon component in the three-month period ended March 31, 2003
increased approximately 58% and the cost per gallon component increased
approximately 52%. As a result, the gross margin increased approximately 3.3
cents on a per gallon basis in the quarter ended March 31, 2003 compared to the
same period in 2002. The gross margin is directly affected by changes in selling
prices relative to changes in costs. An increase or decrease in the price for
crude oil, feedstocks and blending products generally results in a corresponding
increase or decrease in prices for refined products. Generally, the effect of
changes in crude oil and feedstock prices on our consolidated operating results
therefore depends in part on how quickly refined product prices adjust to
reflect these changes. However, in the first quarter of 2002, there was a
substantial increase in refined product costs without an equivalent increase in
sales price resulting in a significant negative impact on our gross margin and
earnings.

         Selling, general and administrative expenses. Selling, general and
administrative expenses decreased 4% from $76 million in the first quarter of
2002 to $73 million in the first quarter of 2003.

         Interest expense. Interest expense increased by $7 million in the
three-month period ended March 31, 2003 as compared to the same period in 2002.
This was primarily due to the net increase in the outstanding debt balance and
higher overall interest rates resulting from the issuance of the $550 million
senior notes and the closing of the $200 million term loan in February 2003.

LIQUIDITY AND CAPITAL RESOURCES

         Consolidated net cash provided by operating activities totaled
approximately $300 million for the three-month period ended March 31, 2003.
Operating cash flows were derived primarily from net income of $140 million,
depreciation and amortization of $79 million and changes in operating assets and
liabilities of $81 million. The more significant changes in operating assets and
liabilities include a decrease in inventory, an increase in income taxes
payable, and an increase in deferred taxes offset, in part, by a decrease in
current liabilities and an increase in notes and accounts receivable.


         Net cash used in investing activities in the three month period ended
March 31, 2003 totaled $105 million consisting primarily of capital expenditures
of $90 million. These capital expenditures include $43 million in spending to
meet regulatory requirements, $18 million in spending for maintenance capital
projects, and $29 million in strategic capital expenditures.


         Net cash provided by financing activities totaled $254 million for the
three-month period ended March 31, 2003, consisting primarily of the proceeds
from Senior Notes due in 2011 of $547 million and the proceeds from the senior
secured term loan of $200 million. These proceeds were offset by the payment of
$279 million on revolving bank loans, the repurchase of $50 million of Senior
Notes due 2006 for a cash payment of $47.5 million, the payment of $50 million
on master shelf agreement notes, the repurchase of $75 million of tax-exempt
bonds, the repayment of loans from affiliates of $30 million, and $12 million in
debt issuance costs associated with the Senior Notes due 2011.

         As of March 31, 2003, capital resources available to us included cash
generated by operations and available borrowing capacity under our committed
bank facilities of $545 million. Our $25 million revolving

                                       19

<PAGE>

bank loan maturing in May 2003 will not be renewed. Our Company's management
believes that we have sufficient capital resources to carry out planned capital
spending programs, including regulatory and environmental projects in the near
term and to meet currently anticipated future obligations as they arise. We
periodically evaluate other sources of capital in the marketplace and anticipate
that long-term capital requirements will be satisfied with current capital
resources and future financing arrangements, including the issuance of debt
securities. Our ability to obtain such financing will depend on numerous
factors, including market conditions and our perceived creditworthiness at that
time. (See also "Factors Affecting Forward Looking Statements".)


         Our various debt instruments require maintenance of a specified minimum
net worth and impose restrictions on our ability to:

     -    incur additional debt unless we meet specified interest coverage and
          debt to capitalization ratios;

     -    place liens on our property, subject to specified exceptions;

     -    sell assets, subject to specified exceptions;

     -    make restricted payments, including dividends, repurchases of capital
          stock and specified investments; and

     -    merge, consolidate or transfer assets.

         We are in compliance with our obligations under our debt financing
arrangements at March 31, 2003.

         Upon the occurrence of a change of control of our Company, as defined
in the Indenture governing our 11-3/8% Senior Notes due February 1, 2011, the
holders of those notes have the right to require us to repurchase them at a
price equal to 101% of the principal amount thereof plus accrued interest. In
addition, our bank credit agreements provide that, unless lenders holding
two-thirds of the commitments thereunder otherwise agree, a change in control of
our Company, as defined in those agreements, will constitute a default under
those credit agreements.


         Internally generated cash flow, together with borrowings available
under our credit facilities, are expected to be sufficient to fund capital
expenditures. In addition, we have taken steps to reduce our capital
expenditures in 2003 by approximately $250 million, resulting in budgeted total
2003 expenditures of $460 million, and will reassess the economics of the
postponed projects at a later date. We accomplished this reduction in capital
expenditures by authorizing no new discretionary spending for 2003, suspending
discretionary projects already underway where practical and delaying maintenance
and regulatory projects. In addition, two major refinery maintenance turnarounds
were delayed past 2003 so capital spending for these projects was also delayed.
Of the $250 million spending reduction, 60% was discretionary, 27% was
maintenance of the business and 13% was regulatory. The regulatory and
maintenance of the business projects will be completed under a delayed schedule.
Discretionary spending will be restarted as funds become available. Finally, we
are continuing to review the timing and amount of scheduled expenditures under
our planned capital spending programs, including regulatory and environmental
projects in the near term.



         CITGO is required by various state regulations to demonstrate financial
responsibility for environmental liability coverage, closure and post-closure
care related to its facilities. Historically, CITGO has satisfied the
requirements based upon the credit rating of its bonds and various financial
ratios. CITGO's credit rating and 2002 financial ratios did not satisfy the
requirements of the state of Louisiana and as a result, CITGO is required to
present an alternate form of financial responsibility assurance. Possible
options include, among other things, a


                                       20

<PAGE>

letter of credit, an insurance policy, placing cash in a trust account or filing
a request for a variance from the regulations of that state. Presently, CITGO is
evaluating its options.


         We have outstanding letters of credit that support tax-exempt bonds
that were issued previously for our benefit. Some of the providers of these
outstanding letters of credit have indicated that they will not renew such
letters of credit. As a result, we repurchased $75 million of tax-exempt bonds
that were supported by these letters of credit in March 2003, $25 million in
April 2003 and $8 million in May 2003. We expect that we will seek to reissue
these tax-exempt bonds, with replacement letters of credit in support, if we are
able to obtain such letters of credit from other financial institutions or,
alternatively, we will seek to replace these tax-exempt bonds with new
tax-exempt bonds that will not require letter of credit support. As of May 1,
2003, we have an additional $239 million of letters of credit outstanding that
back or support other bond issues that we have issued through governmental
entities, which are subject to renewal during the twelve month period ending
March 31, 2004. We have not received any notice from the issuers of these
additional letters of credit indicating an intention not to renew. Currently, we
are working with a financial institution to renew a $127 million letter of
credit facility that expires in June 2003 which supports $120 million of
tax-exempt bonds. However, we cannot be certain that any of our letters of
credit will be renewed, that we will be successful in obtaining replacements if
they are not renewed, that any replacement letters of credit will be on terms as
advantageous as those we currently hold or that we will be able to arrange for
replacement tax-exempt bonds that will not require letter of credit support. To
the extent that issuers of these letters of credit do not renew, the Company is
not successful in obtaining replacements if they are not renewed, or that the
Company is not successful in arranging for replacement tax-exempt bonds that
will not require letter of credit support, this will increase the Company's cash
needs and reduce its liquidity. We believe that we have and will continue to
have sufficient liquidity to accommodate any of these potential outcomes.


         In August 2002, three of our affiliates entered into agreements to
advance excess cash to us from time to time under demand notes. These notes
provide for maximum amounts of $10 million from PDV Texas, Inc., $30 million
from PDV America and $10 million from PDV Holding. At March 31, 2003, the
outstanding amounts under these notes were $0 million, $9.5 million and $0
million, respectively.

         We have undertaken the following to supplement and improve our
liquidity:

     -  On February 27, 2003 we issued $550 million aggregate principal amount
        of 11-3/8 percent unsecured senior notes due February 1, 2011.

     -  On February 27, 2003, we closed on a three year $200 million, senior
        secured term loan. Security is provided by our 15.8 percent equity
        interest in Colonial Pipeline and our 6.8 percent equity interest in
        Explorer Pipeline.

     -  On February 28, 2003, a new accounts receivable sales facility was
        established. This facility allows for the non-recourse sale of certain
        accounts receivable to independent third parties. A maximum of $200
        million in accounts receivable may be sold at any one time. This new
        facility does not contain any covenants that trigger increased costs or
        burdens as a result of a change in our securities ratings.


     -  On April 25, 2003, we completed a transaction that will provide
        approximately $50 million of liquidity from the transfer of title to a
        third party of certain of our refined products at the time those
        products are delivered into the custody of interstate pipelines. The
        terms of this transaction include an option to acquire like volumes of
        refined products from the third party at prevailing prices at
        predetermined transfer points. The transfer of title to certain refined
        products began in May 2003.


     -  We have reduced our planned capital expenditures in 2003 by
        approximately $250 million.

                                       21

<PAGE>

         Our senior unsecured debt ratings, as currently assessed by the three
major debt rating agencies, are as follows:

                  Moody's Investor's Services             Ba3
                  Standard & Poor's Ratings Group         BB-
                  Fitch Investors Services, Inc.          B+

         Our secured debt ratings, as currently assessed by the three major debt
rating agencies, are as follows:

                  Moody's Investor's Services             Ba2
                  Standard & Poor's Ratings Group         BB
                  Fitch Investors Services, Inc.       Not Rated

         PDV America has a $500 million principal payment due in August 2003.
PDV America holds a $500 million mirror note due from PDVSA which is designed to
provide sufficient liquidity to PDV America to make this payment. While PDVSA's
obligation remains unchanged, we may pay a dividend of up to $500 million to PDV
America to provide funds for the repayment of PDV America's notes due August
2003, if we satisfy the conditions under the indenture governing our 11-3/8%
senior notes to make such a dividend.


         Our debt instruments do not contain any covenants that trigger
increased costs or burdens as a result of a change in our securities ratings.
However, certain of our guarantee agreements, which support approximately $20
million of PDV Texas, Inc., an affiliate, letters of credit, require us to cash
collateralize the applicable letters of credit upon a reduction of our credit
rating below a stated level.


         We believe that we have adequate liquidity from existing sources to
support our operations for the foreseeable future. We are continuing to review
our operations for opportunities to reduce operating and capital expenditures.

NEW ACCOUNTING STANDARDS

         On January 1, 2003 CITGO adopted Statement of Financial Accounting
Standards No. 143, "Accounting for Asset Retirement Obligations" (SFAS No. 143)
which addresses financial accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the associated asset
retirement costs. It applies to legal obligations associated with the retirement
of long-lived assets that result from the acquisition, construction, development
and/or the normal operation of a long-lived asset, except for certain
obligations of lessees. We have identified certain asset retirement obligations
that are within the scope of the standard, including obligations imposed by
certain state laws pertaining to closure and/or removal of storage tanks,
contractual removal obligations included in certain easement and right-of-way
agreements associated with our pipeline operations, and contractual removal
obligations relating to a refinery processing unit located within a third-party
entity's facility. We cannot currently determine a reasonable estimate of the
fair value of our asset retirement obligations due to the fact that the related
assets have indeterminate useful lives which preclude development of assumptions
about the potential timing of settlement dates. Such obligations will be
recognized in the period in which sufficient information exists to estimate a
range of potential settlement dates. Accordingly, the adoption of SFAS No. 143
did not impact the Company's financial position or results of operations.

         In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities" ("FIN 46"), which clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements." FIN 46
defines variable interest entities and how an enterprise should assess its
interests in a variable interest entity to decide whether to consolidate that
entity. The interpretation requires certain minimum

                                       22

<PAGE>

disclosures with respect to variable interest entities in which an enterprise
holds significant variable interest but which it does not consolidate. FIN 46
applies immediately to variable interest entities created after January 31,
2003, and to variable interest entities in which an enterprise obtains an
interest after that date. It applies in the first fiscal year or interim period
beginning after June 15, 2003 to variable interest entities in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
FIN 46 applies to public enterprises as of the beginning of the applicable
interim or annual period, and it applies to nonpublic enterprises as of the end
of the applicable annual period. FIN 46 may be applied prospectively with a
cumulative-effect adjustment as of the date on which it is first applied or by
restating previously issued financial statements for one or more years with a
cumulative-effect adjustment as of the beginning of the first year restated.
CITGO expects that the application of FIN 46 to variable interest entities in
which it acquired an interest before February 1, 2003 will not have a material
impact on its financial position or results of operations.

PROPOSED ACCOUNTING CHANGE

         The American Institute of Certified Public Accountants ("AICPA") has
issued a "Statement of Position" exposure draft on cost capitalization that is
expected to require companies to expense the non-capital portion of major
maintenance costs as incurred. The statement is expected to require that any
existing unamortized deferred non-capital major maintenance costs be expensed
immediately. This statement also has provisions which will change the method of
determining depreciable lives. The impact on future depreciation expense is not
determinable at this time. The exposure draft indicates that this change will be
required to be adopted for fiscal years beginning after June 15, 2003, and that
the effect of expensing existing unamortized deferred non-capital major
maintenance costs will be reported as a cumulative effect of an accounting
change in the consolidated statement of income. Currently, the AICPA is
discussing the future of this exposure draft with the FASB. The final accounting
requirements and timing of required adoption are not known at this time. At
March 31, 2003, we have included turnaround costs of $200 million in other
assets. Company management has not determined the amount, if any, of these costs
that could be capitalized under the provisions of the exposure draft.

                                       23

<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


         Introduction. We have exposure to price fluctuations of crude oil and
refined products as well as fluctuations in interest rates. To manage these
exposures, our management has defined certain benchmarks consistent with its
preferred risk profile for the environment in which we operate and finance our
assets. We do not attempt to manage the price risk related to all of our
inventories of crude oil and refined products. As a result, at March 31, 2003,
we were exposed to the risk of broad market price declines with respect to a
substantial portion of our crude oil and refined product inventories. As of
March 31, 2003 CITGO's total crude and refined products inventory was 44 million
barrels. Aggregate commodity derivative positions entered into for price risk
management purposes at that date totaled 34 thousand barrels. The following
disclosures do not attempt to quantify the price risk associated with such
commodity inventories.


         Commodity Instruments. We balance our crude oil and petroleum product
supply/demand and manage a portion of our price risk by entering into petroleum
commodity derivatives. Generally, our risk management strategies qualified as
hedges through December 31, 2000. Effective January 1, 2001, our policy is to
elect hedge accounting only under limited circumstances involving derivatives
with initial terms of 90 days or greater and notional amounts of $25 million or
greater. At March 31, 2003, none of our commodity derivatives were accounted for
as hedges.

                                       24

<PAGE>

                        NON TRADING COMMODITY DERIVATIVES
                        OPEN POSITIONS AT MARCH 31, 2003

<TABLE>
<CAPTION>
                                                                  MATURITY      NUMBER OF    CONTRACT     MARKET
    COMMODITY                          DERIVATIVE                   DATE        CONTRACTS      VALUE     VALUE (4)
    ---------                          ----------                 --------      ---------    --------    ---------
                                                                                                ($ in millions)
                                                                                             ---------------------
<S>                    <C>                                        <C>           <C>          <C>         <C>
No Lead Gasoline (1)   Futures Purchased                            2003             20      $    0.8    $    0.8
                       Forward Purchase Contracts                   2003          3,307      $  133.0    $  132.2
                       Forward Sales Contracts                      2003          2,685      $  100.6    $  103.2

Distillates (1)        Futures Purchased                            2003            583      $   17.6    $   18.3
                       Futures Purchased                            2004            141      $    4.2    $    4.3
                       Futures Sold                                 2003             25      $    0.8    $    0.8
                       OTC Swaps (Pay Fixed/Receive Float)(3)       2003            120      $      -    $   (0.2)
                       Forward Purchase Contracts                   2003          1,717      $   79.4    $   73.6
                       Forward Sale Contracts                       2003          2,320      $   78.3    $   74.4

Crude Oil (1)          Listed Put Options Purchased                 2003            150      $      -    $      -
                       Listed Put Options Sold                      2003            600      $      -    $   (0.2)
                       Forward Purchase Contracts                   2003          2,681      $   81.7    $   76.6
                       Forward Sale Contracts                       2003            777      $   23.6    $   22.6

Natural Gas (2)        Listed Call Options Purchased                2003             25      $      -    $      -
                       Listed Call Options Sold                     2003             25      $      -    $   (0.1)

Gas Crack (1)          OTC Swaps (Pay Float/Receive Fixed) (3)      2003            550      $      -    $   (0.1)

Heat Crack (1)         OTC Swaps (Pay Fixed/Receive Float) (3)      2003          1,150      $      -    $   (1.3)
                       OTC Swaps (Pay Float/Receive Fixed) (3)      2003          1,650      $      -    $    0.8
</TABLE>

-----------------------------
(1) 1,000 barrels per contract

(2) Ten-thousands of mmbtu per contract

(3) Floating price based on market index designated in contract; fixed price
    agreed upon at date of contract.

(4) Based on actively quoted prices.

                                       25

<PAGE>

                        NON TRADING COMMODITY DERIVATIVES
                        OPEN POSITIONS AT MARCH 31, 2002

<TABLE>
<CAPTION>
                                                                  MATURITY     CONTRACTED    CONTRACT     MARKET
    COMMODITY                         DERIVATIVE                    DATE         VOLUME        VALUE     VALUE (4)
    ---------                         ----------                  --------     ----------    --------    ---------
                                                                                                ($ in millions)
                                                                                             ---------------------
<S>                    <C>                                        <C>          <C>           <C>         <C>
No Lead Gasoline (1)   Futures Purchased                            2002            441      $  15.1     $   15.4
                       Futures Sold                                 2002            577      $  18.6     $   20.0
                       Forward Purchase Contracts                   2002          2,826      $  86.5     $   93.1
                       Forward Sale Contracts                       2002          1,350      $  41.9     $   45.3

Distillates (1)        Futures Purchased                            2002            926      $  25.1     $   26.7
                       Futures Purchased                            2003            152      $   3.9     $    4.4
                       Futures Sold                                 2002            882      $  22.5     $   25.1
                       Forward Purchase Contracts                   2002          1,500      $  39.6     $   41.1
                       Forward Sale Contracts                       2002          2,050      $  52.7     $   57.1

Crude Oil (1)          Futures Purchased                            2002            965      $  22.1     $   25.3
                       Futures Sold                                 2002            856      $  21.4     $   22.5
                       Futures Sold                                 2003             90      $   2.2     $    2.2
                       Listed Options Purchased                     2002          1,550      $     -     $    0.9
                       Listed Options Sold                          2002          1,550      $     -     $   (0.4)
                       OTC Swaps (Pay Floating/Receive Fixed)(3)    2002          1,260      $     -     $   (1.0)
                       OTC Swaps (Pay Fixed/Receive Floating)(3)    2002          1,830      $     -     $    1.7
                       Forward Purchase Contracts                   2002          5,021      $ 120.7     $  132.4
                       Forward Sale Contracts                       2002          5,042      $ 119.0     $  133.0

Natural Gas (2)        Futures Sold                                 2002             40      $   1.3     $    1.3
</TABLE>

-----------------------
(1) 1,000 barrels per contract

(2) Ten-thousands of mmbtu per contract

(3) Floating price based on market index designated in contract; fixed price
    agreed upon at date of contract.

(4) Based on actively quoted prices.

                                       26

<PAGE>

         Debt Related Instruments. We have fixed and floating U.S. currency
denominated debt. We use interest rate swaps to manage our debt portfolio toward
a benchmark of 40 to 70 percent fixed rate debt to total fixed and floating rate
debt. These instruments have the effect of changing the interest rate with the
objective of minimizing our long-term costs. At March 31, 2003 and 2002, our
primary exposures were to LIBOR and floating rates on tax exempt bonds.

         For interest rate swaps, the table below presents notional amounts and
interest rates by expected (contractual) maturity dates. Notional amounts are
used to calculate the contractual payments to be exchanged under the contracts.

                      NON TRADING INTEREST RATE DERIVATIVES
                    OPEN POSITIONS AT MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                             NOTIONAL
                                                FIXED        PRINCIPAL
VARIABLE RATE INDEX     EXPIRATION DATE       RATE PAID       AMOUNT
-------------------     ---------------       ---------      ---------
                                                          ($ in millions)
<S>                     <C>                   <C>         <C>
J.J. Kenny              February 2005           5.30%          $ 12
J.J. Kenny              February 2005           5.27%            15
J.J. Kenny              February 2005           5.49%            15
                                                               ----
                                                               $ 42
                                                               ====
</TABLE>

         Changes in the fair value of these agreements are recorded in other
income (expense). The fair value of the interest rate swap agreements in place
at March 31, 2003, based on the estimated amount that we would receive or pay to
terminate the agreements as of that date and taking into account current
interest rates, was a loss of $3 million, the offset of which is recorded in the
balance sheet caption other current liabilities.

                                       27

<PAGE>

         For debt obligations, the table below presents principal cash flows and
related weighted average interest rates by expected maturity dates. Weighted
average variable rates are based on implied forward rates in the yield curve at
the reporting date.

                                DEBT OBLIGATIONS
                               AT MARCH 31, 2003

<TABLE>
<CAPTION>
                                                                              EXPECTED
                           FIXED        AVERAGE FIXED      VARIABLE       AVERAGE VARIABLE
EXPECTED MATURITIES      RATE DEBT      INTEREST RATE      RATE DEBT       INTEREST RATE
-------------------   ---------------   -------------   ---------------   ----------------
                      ($ in millions)                   ($ in millions)
<S>                   <C>               <C>             <C>               <C>
        2003              $   11             9.30%           $    -                -
        2004                  31             8.02%               16             6.68%
        2005                  11             9.30%                -                -
        2006                 201             8.10%              200             8.47%
        2007                  50             8.94%               12             8.92%
     Thereafter              731            10.41%              330            10.54%
                          ------            -----            ------            -----
        Total             $1,035             9.79%           $  558             9.65%
                          ======            =====            ======            =====

     Fair Value           $1,072                             $  558
                          ======                             ======
</TABLE>

                                DEBT OBLIGATIONS
                               AT MARCH 31, 2002

<TABLE>
<CAPTION>
                                                                              EXPECTED
                           FIXED        AVERAGE FIXED      VARIABLE       AVERAGE VARIABLE
EXPECTED MATURITIES      RATE DEBT      INTEREST RATE      RATE DEBT       INTEREST RATE
-------------------   ---------------   -------------   ---------------   ----------------
                      ($ in millions)                   ($ in millions)
<S>                   <C>               <C>             <C>               <C>
        2002               $  11            9.30%           $ 115             3.45%
        2003                  61            8.79%             300             5.15%
        2004                  31            8.02%              16             6.52%
        2005                  12            9.30%               -                -
        2006                 252            8.06%               -                -
     Thereafter              128            7.85%             484             9.85%
                           -----            -----           -----             ----
        Total              $ 495            8.15%           $ 915             7.45%
                           =====            =====           =====             ====

     Fair Value            $ 487                            $ 915
                           =====                            =====
</TABLE>

                                       28
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

         Within the 90 days prior to the date of this Report, the Company's
management, including the principal executive officer and principal financial
officer, evaluated the Company's disclosure controls and procedures related to
the recording, processing, summarization and reporting of information in the
Company's periodic reports that it files with the Securities and Exchange
Commission (SEC). These disclosure controls and procedures have been designed to
ensure that (a) material information relating to the Company, including its
consolidated subsidiaries, is made known to the Company's management, including
these officers, by other employees of the Company and its subsidiaries, and (b)
this information is recorded, processed, summarized, evaluated and reported, as
applicable, within the time periods specified in the SEC's rules and forms. Due
to the inherent limitations of control systems, not all misstatements may be
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the control. The Company's controls and procedures can only provide
reasonable, not absolute, assurance that the above objectives have been met.
Also, the Company does not control or manage certain of its unconsolidated
entities and as such, the disclosure controls and procedures with respect to
such entities are more limited than those it maintains with respect to its
consolidated subsidiaries.

         As of March 31, 2003, these officers concluded that the design of the
disclosure controls and procedures provide reasonable assurance that they can
accomplish their objectives.

         There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.

                                       29

<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         The required information is incorporated by reference into Part II of
this Report from Note 6 of the Notes to the Condensed Consolidated Financial
Statements included in Part I of this Report.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits




                  Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the
                  Securities Exchange Act of 1934 as to the Quarterly Report on
                  Form 10-Q for the quarterly period ended March 31, 2003 filed
                  by the following officers:



                  31.1     Filed by Luis E. Marin, President and Chief Executive
                           Officer.



                  31.2     Filed by Eddie R. Humphrey, Chief Financial Officer.



                  Certifications Pursuant to Section 1350 of Chapter 63 of Title
                  18 United States Code as to the Quarterly Report on Form 10-Q
                  for the Quarterly Period ended March 31, 2003 filed by the
                  following officers:



                  32.1     Filed by Luis E. Marin, President and Chief Executive
                           Officer.



                  32.2     Filed by Eddie R. Humphrey, Chief Financial Officer.


         (b)      Reports on Form 8-K:

                  A report on Form 8-K was filed with the Securities and
         Exchange Commission on January 21, 2003 in regard to the disruption in
         our supply of crude oil as a result of the general strike in Venezuela.

                  A report on Form 8-K was filed with the Securities and
         Exchange Commission on February 6, 2003. The purpose of this filing was
         to furnish information about our Company included in various
         disclosures to prospective investors in connection with our offering of
         $550 million of senior unsecured notes.

                  A report on Form 8-K was filed with the Securities and
         Exchange Commission on February 21, 2003. The purpose of this report
         was to file our financial statements for the year ended December 31,
         2002.

                  A report on Form 8-K was filed with the Securities and
         Exchange Commission on February 25, 2003. The purpose of this filing
         was to update information in our report on Form 8-K dated February 6,
         2003, about our Company included in various disclosures to prospective
         investors in connection with our offering of $550 million of senior
         unsecured notes.

                  A report on Form 8-K was filed with the Securities and
         Exchange Commission on February 27, 2003 regarding information about
         enhancements to our liquidity.

                                       30

<PAGE>

                  A report on Form 8-K was filed with the Securities and
         Exchange Commission on February 28, 2003. The purpose of this report
         was to furnish information about our Company included in our News
         Release, announcing enhancements to our liquidity.

                  A report on Form 8-K was filed with the Securities and
         Exchange Commission on May 2, 2003. The purpose of this report was to
         furnish information included in our News Release about our Company's
         first quarter 2003 results.

                  A report on Form 8-K/A was filed with the Securities and
         Exchange Commission on May 6, 2003. The purpose of this report was to
         amend information in our report on Form 8-K dated May 2, 2003.

                                       31

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                           CITGO PETROLEUM CORPORATION


Date: September 8, 2003                     /s/ Larry E. Krieg
                                       -------------------------------------
                                                Larry E. Krieg
                                       Controller (Chief Accounting Officer)


                                       32

<PAGE>

                               INDEX TO EXHIBITS


Exhibits

Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities
Exchange Act of 1934 as to the Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2003 filed by the following officers:

31.1     Filed by Luis E. Marin, President and Chief Executive Officer.

31.2     Filed by Eddie R. Humphrey, Chief Financial Officer.

Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States
Code as to the Quarterly Report on Form 10-Q for the Quarterly Period ended
March 31, 2003 filed by the following officers:

32.1     Filed by Luis E. Marin, President and Chief Executive Officer.

32.2     Filed by Eddie R. Humphrey, Chief Financial Officer.