Oil firms reject Venezuela deal

Exxon Mobil and ConocoPhillips reject nationalisation deal but four others accept.

    Chavez, right, is on a nationalisation campaign covering oil, telecoms and electricity sectors [EPA]

    France's Total, Norway's Statoil, British Petroleum and US company Chevron signed the agreements.

     

    Takeover

     

    The new accords for the Orinoco mean that PDVSA will double its involvement in the river projects.

     

    "PDVSA has gone from holding an average 39 percent participation to a participation of 78 percent on average," PDVSA said.

     
    Venezuela will aim to finalise a compensation package with ExxonMobil and ConocoPhillips within two months, Eulogio del Pino, the director of state oil company PDVSA, said on Tuesday.

     

    He said Venezuela could reach an agreeable settlement with the two oil companies, without the need for a lawsuit.

     
    On May 1, the government seized control of the operations of the Orinoco projects, which were among the last privately run fields in the South American nation.
     
    Chavez gave the six companies extra time to work out a deal over the projects' new ownership structure.
     
    Sticking points include asset valuation, compensation for lost value, and decision-making rules in the future joint ventures, according to industry officials.
     
    Royalty increase
     

    Venezuela, Latin America's only member of the Organisation of Petroleum Exporting Countries (OPEC,) hopes to certify by 2008 Orinoco has oil reserves of 1.3 trillion barrels.

     

    Only 20 per cent of the crude reserve can be extracted with current technology, as the fuel is extra-heavy and needs special processing before it can be refined.

     

    Oil companies formerly paid one per cent in royalties for the crude extracted from Orinoco.

     

    As part of the nationalisation drive, royalties have been raised to 33.2 per cent.

     
    The oil companies that agreed to stay on in the four projects have two months before a final deal is submitted to the Venezuelan congress for approval.
     
    Chavez's high profile showdown with oil companies and his broader nationalisation drive covering the telecommunications and electricity sectors apparently have the support of Venezuela's poor majority who got him re-elected in December.
     
    The president has used billions of dollars in oil revenues to finance social programmes.

    SOURCE: Al Jazeera and agencies


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