NEW YORK — Citigroup, the recipient of a multibillion-dollar bailout from taxpayers, said Friday it sold its commodities trading unit to Occidental Petroleum for $250 million, defusing a potential showdown with the government over a lucrative pay package for a star trader.

Citigroup, already closely watched by the government because of its $49 billion in aid, was under further scrutiny because of the estimated $100 million in 2009 compensation for Phibro trader Andrew J. Hall.

However, in avoiding a possible confrontation with the federal government, Citigroup will lose a unit that earned an average of $371 million annually during the past five years, a heavy price to pay for a bank that needs to generate income to repay the Treasury.

In return for the money it provided Citigroup, the government now holds a 34 percent stake in the bank. Citigroup said it did not agree to the sale because of government pressure. Meanwhile, officials at the Treasury Department declined to comment directly when asked whether the government had pressured Citigroup to dump Phibro, its huge pay packages and the volatility that goes along with trades in the energy market.

It also was not known whether the Obama administration's pay czar, Kenneth Feinberg, would continue to review Hall's pay package following the sale to Occidental. Feinberg is reviewing compensation at Citigroup and the six other banks.