HOUSTON, Jan 27 (Reuters) - A U.S federal judge in

Delaware on Monday approved new terms to relaunch bidding in a

complex auction of shares in the parent of Venezuela-owned

refiner Citgo Petroleum, set to pay creditors for past defaults

and expropriations.

Judge Leonard Stark approved a termination fee equivalent to

3% of the value of attached judgments if a court officer

overseeing the process recommends a bid other than the stalking

horse bid. An up to $30 million reimbursement of termination

expenses was also approved.

The bidding changes seek to encourage higher offers, after a

$7.3 billion conditional bid by an affiliate of hedge fund

Elliott Investment Management last year was rejected by most

creditors.