*

Activist firm tops rival offers by CVR Energy ( CVI ), Gold

Reserve ( GDRZF )

*

Citgo bid follows campaigns at Marathon Petroleum,

Phillips 66

(Adds details, context throughout)

By Marianna Parraga and Gary McWilliams

HOUSTON, Sept 27 (Reuters) - A conditional offer for

shares in Citgo Petroleum's parent by financial firm Elliott

Investment Management was accepted by a U.S. court officer

overseeing an auction that could decide the future control of

the Venezuela-owned oil refiner, sources said.

A U.S. District Court in Delaware is auctioning shares in

Citgo parent PDV Holding to repay up to $21.3 billion in claims

against Venezuela and state-oil firm PDVSA for expropriations

and debt defaults. A second and final bidding round closed

earlier this year, leading to negotiations on terms.

Elliott's offer for shares in Citgo parent is a combination

of cash and credit and is subject to the resolution of claims by

a group of holders of defaulted Venezuela bonds led by Gramercy

Distress Opportunity Fund, the sources said.

The value of Elliott's offer could not be immediately

learned. The company did not reply to requests for comment.

Its pursuit of control of Citgo follows successful campaigns

that pressured U.S. oil refiners Marathon Petroleum and Phillips

66 to improve their results. It earned billions of dollars from

its Marathon Petroleum effort.

Elliott submitted offers in the two

bidding rounds

, competing with rival bids from U.S. oil refiner

CVR Energy ( CVI )

and miner Gold Reserve ( GDRZF ).

Even though the court established a priority ranking

for claims, some bondholders have been pursuing their claims in

separate court actions, threatening to derail the sales process

that has been delayed five times.

TERMS CHALLENGED

The conditional nature of Elliott's bid is stirring

opposition from Venezuela parties involved in the case, since

the federal judge initially said the offer selected would have

to be binding and final.

Earlier on Friday, court officer Robert Pincus notified

the judge he had

ended talks

with holders of PDVSA's 2020 bonds without a resolution, a

condition he had imposed to consider offers in the second round,

a filing showed. The bonds are collateralized with Citgo's

equity.

Thomas Laryea, an attorney representing the Venezuela

Creditor Committee that includes holders of 2020 bonds, declined

on Friday to comment on developments.

U.S. judge Leonard Stark has not confirmed the court

officer's selection. He has planned to discuss next week a

proposal to block the bondholders from resorting to other courts

and trying to "jump the line" set by Delaware's creditors list.

Even if Stark approves the motion, the Gramercy-led

group can challenge his decision, which would ultimately freeze

Elliott's offer until the dispute is resolved, experts said.