HOUSTON, Aug 8 (Reuters) - U.S. oil refiner Citgo

Petroleum on Thursday reported a net loss of $25

million in the second quarter following unfavorable market

conditions and refinery maintenance and upgrades, compared with

income of $410 million in the quarter immediately prior.

A U.S. federal court is auctioning shares of one of the

parents of the Venezuela-owned company, which is the seventh-

largest U.S. refiner, in order to pay up to $21.3 billion in

claims from debt defaults and expropriations in the South

American country.

Citgo's crude processing fell to 678,000 bpd with an average

crude utilization of 84% due to turnaround and maintenance

activities, compared with crude runs of 769,000 bpd and

utilization of 95% in the previous quarter.

Citgo had net income of $2 billion last year.

"Our second quarter earnings reflect a lower margin

environment and the impact of extensive turnaround and

maintenance activities at our refineries," Citgo Chief Executive

Carlos Jorda said in a release.

Citgo's 463,000-bpd refinery in Lake Charles, Louisiana,

underwent works to improve utilization of certain units, while

the company's other two refineries, the 177,000-bpd facility in

Lemont, Illinois, and the 167,000-bpd one in Corpus Christi,

Texas, optimized heavy crude processing.

The company has dedicated about $1 billion so far this year

to capital expenditures, turnarounds and catalysts, it said.

Quarter-end liquidity fell to $3.8 billion from $4.5 billion

at the end of the first quarter, a key metric companies

participating in the court-organized auction of shares have been

monitoring to calculate their bids.

Marketing sales volume rose to 424,000 bpd in the second

quarter, from 394,000 bpd the previous quarter, the largest

quarterly increase in branded sites in the last two decades.

The company reported an unbranded gasoline sales record in

June and new jet fuel sales contracts signed.

U.S. refiner CVR Energy ( CVI ), backed by activist investor

Carl Icahn, and a group of creditors holding claims against

Venezuela are competing in the last mile of the auction for

Citgo's parent, sources told Reuters earlier this month.

By Aug. 22, a winner must be selected by a court officer

overseeing the auction in Delaware, while Oct. 30 was set for

the sales process' final hearing.