(Updates July 1 story with context on the auction, procedure in

paragraphs 1, 2, 4-8 and 19)

By Marianna Parraga

HOUSTON, July 2 (Reuters) - A U.S. court has received

last-minute improved bids in a auction of shares in the parent

of Venezuela-owned Citgo Petroleum from at least three

consortia, potentially raising the price tag for the seventh

largest U.S. refiner.

A Delaware court officer overseeing the auction is

expected to recommend a winner on Wednesday unless he requests

more time to evaluate the revised bids, which were allowed

through Tuesday.

The court-organized auction stems from an eight-year-old

case that Canadian miner Crystallex initiated in Delaware

against Venezuela. The federal court found Citgo's parent, PDV

Holding, liable for Venezuela's debts and past expropriations,

paving the way for over a dozen other creditors to pursue

compensation of nearly $19 billion.

A second bidding round initiated this year is expected to be

completed soon when a winner is selected, following a string of

delays, but results could be delayed until all improved bids are

evaluated. The final hearing on results was set for August 18.

A $3.7 billion starting bid by Contrarian Funds' affiliate

Red Tree Investments, which included a separate $2 billion

agreement to pay holders of a defaulted Venezuela bond, kicked

off the round in March. Rivals began placing their offers in

April.

Rival bidders include a group by a subsidiary of miner Gold

Reserve ( GDRZF ), Rusoro Mining ( RMLFF ) and conglomerate Koch; a

group led by private equity firm Black Lion Capital Advisors;

and a consortium led by commodities house Vitol, according to

court filings and sources.

Elliott Investment Management's affiliate Amber Energy also

considered a bid, but it remains unclear if it submitted a

revised offer during the "topping" period, which finalized on

June 18 but left room to revise offers already submitted through

July 1.

Court officer Robert Pincus last month said the recent

resolution of parallel legal cases in pursuit of the same assets

was encouraging new bids.

How big a loss could this be for Venezuela?

If Venezuela, which owns 100% of the refiner and its

U.S.-based parent companies, fails to retain some equity, it

would lose its most significant overseas asset. The country,

with foreign debt reaching $150 billion, has already lost other

assets in Europe and Asia to creditors.

Delaware Judge Leonard Stark has left open a possibility for

parties representing Venezuela to submit an offer. But boards

supervising the refiner would need to secure backing from

politicians in both Caracas and Washington, a challenge given

U.S. sanctions on the OPEC nation and otherwise strained ties.

Prior to the sanctions, Citgo's 807,000-barrel-per-day

refining network was a primary processor of Venezuela's heavy

sour crudes. Since Citgo cut ties with its ultimate parent,

Caracas-based state-run oil company PDVSA, in 2019, Venezuela

has struggled to find new markets for its oil, while the

Houston-based refiner has resorted to other crude suppliers.

Venezuela's opposition, which through its Congress majority

in 2019 appointed the boards that now supervise the refiner, has

worked for years to retain Citgo, including funding legal

defenses and lobbying in Washington. The U.S. Treasury

Department, which has shielded Citgo from creditors in recent

years, must approve the auction's eventual winner.

Opponents of Venezuelan President Nicolas Maduro have said

Citgo could aid the nation's economic recovery if democracy is

restored. Maduro's officials have rejected U.S. sanctions and

called the auction the robbery of a sovereign asset.

Can creditors claim post-auction compensation?

Yes. Many creditors including ConocoPhillips ( COP ), which

holds the largest claims of almost $12 billion, and Gold

Reserve ( GDRZF ), have pursued legal action outside of the U.S. to seize

Venezuela-owned assets, such as bank accounts, tankers and

PDVSA-controlled storage facilities.

The creditors, who rejected the outcome of a bidding round

last year due to conditions imposed by the winner, Elliott's

affiliate Amber Energy, can submit objections if dissatisfied

with its results.

They can also continue parallel cases in other U.S. courts,

which so far have not significantly progressed to enforce

bond-related claims or prove that PDVSA's U.S. subsidiaries

should be liable for Venezuela's debts, a necessary step to

pursue Citgo's assets.

Accumulating legal costs and uncertain recovery prospects

led three of the 18 creditors originally cleared by the court to

withdraw. Others, including an owner of artifacts that belonged

to Venezuelan independence hero Simon Bolivar, did not fulfill

all court requirements to participate.

Will all creditors be compensated?

Unlikely. Citgo was valued between $11 billion and $13

billion as part of the Delaware case.

Despite a rising price tag due to last-minute competition

among bidders, the refiner's recent weak performance, including

a profit that plummeted to $305 million last year from $2

billion in 2023, could affect its valuation.

These factors suggest that a portion of the 15 registered

creditors, collectively claiming $18.9 billion, may not receive

distributions from the auction.