Adds offers' details, context in paragraphs 2, 6 and 8-10

By Marianna Parraga

HOUSTON, Aug 29 (Reuters) - A $5.89 billion bid from an affiliate of hedge fund Elliott Investment Management has been recommended as the winner of a U.S. court-organized auction of shares in the parent of Venezuela-owned refiner Citgo Petroleum, according to documents filed late on Friday by the officer overseeing the sale process.

Improved bids emerged in the final stages of the auction, spurred by court rulings in parallel legal cases that encouraged revisions. Delaware Judge Leonard Stark is expected to make a final decision on the winner following a court hearing next month.

The recommendation from court officer Robert Pincus came despite a last-minute effort from a subsidiary of miner Gold Reserve GRZ.V earlier this week to sweeten its $7.4 billion offer, which had previously been marked as the frontrunner.

Earlier this month, Pincus said an improved bid from Elliott's affiliate Amber Energy was superior. The court gave three days to the Gold Reserve group to try and match it.

Pincus said on Friday that the transaction proposed by Gold Reserve's Dalinar Energy "did not match or exceed the Amber sale transaction, and therefore, the Amber sale transaction continues to constitute a superior proposal."

However, he left the door open for the court to request a future revision of his recommendation based on "intervening events."

The auction's proceeds are expected to compensate some of the 15 creditors that have been fighting since 2017 to recover nearly $19 billion in U.S. courts after Venezuela expropriated assets and defaulted on debt.

Amber's offer fully covers nine claimants, one of the filings showed, compared with the 12 claimants that the Gold Reserve group proposed to compensate. However, it includes a separate agreement with more than 75% of the holders of a defaulted Venezuelan bond collateralized with Citgo equity to settle their claim by paying them $2.13 billion in cash.

Amber is also offering partial compensation of $500 million to Gold Reserve, which wants the auction proceeds to cover the expropriation of its mining assets in Venezuela. The miner has not accepted the offer, one of the filings said.

Gold Reserve and creditors Siemens Energy ENR1n.DE, Consorcio Andino and Valores Mundiales this week filed motions to disqualify Amber's bid, saying that Pincus' determination that its price was superior "discarded the bidding procedures." Those motions are under review.

(Reporting by Marianna Parraga; Edited by Nathan Crooks)

((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters Messaging: @mariannaparraga))