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Foreign players cede Orinoco control



By Upstream staff 

All foreign companies operating heavy oil projects in Venezuela's Orinoco reserve have agreed to cede operational control to the state, another rapid step in President Hugo Chavez's nationalisation push.

State oil company PDVSA said today that US giants ConocoPhillips and Chevron had agreed to meet a 1 May deadline decreed by Chavez to hand over operations to PDVSA in two of the four targetted projects, Reuters reported.

Norway's Statoil quickly followed suit, saying the project that it operates with France's Total would pass to PDVSA too.

The companies - some of the world's largest - will form transition committees to oversee the handover of their multibillion-dollar projects' operations in the Opec nation.

US supermajor ExxonMobil, the only other foreign company involved in the projects, agreed on Monday to form such a body.

The four Orinoco projects, valued at more than $30 billion, turn tar-like oil into around 600,000 barrels per day of lighter synthetic crude.

Chavez, who has been pressing a raft of nationalisations since his landslide reelection in December, wants the state to take at least 60% of the Orinoco crude projects.

The government has warned, however, that it will not pay in cash for the takeovers. It wants to compensate the companies with payments in oil.

Although he set the May deadline for PDVSA to take the operational helm, Chavez is allowing the foreign investors until almost September to finalise the terms of their stakeholding in the projects.

PDVSA drector Eulogio del Pino said in a company statement the committees were being formed "so that the nationalisation of these businesses should be finalised by 1 May and that the operations should be transferred from the foreign companies to the Venezuelan state."

Also today, Venezuela's tax agency said it would shut for 48 hours the administrative offices of an Orinoco oil project involving ExxonMobil and BP.

However it said the closure, due to some non-compliance with value added tax obligations, would not affect oil operations.


Thursday, 08 March, 2007, 15:43 GMT  | last updated: Thursday, 08 March, 2007, 21:33 GMT

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