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Friday, 21 November, 2008, 20:20 GMT | more >>

Venezuela shuts out US pair



By Upstream staff 

US supermajors ConocoPhillips and ExxonMobil were effectively forced out of Venezuela's oil sector today after they failed to sign agreements consenting to the restructuring of their Orinoco heavy oil joint ventures in Venezuela as government-controlled "mixed companies".

Other foreign players in the sector, including Chevron, BP, Total and Statoil, signed agreement giving Venezuelan state oil company PDVSA control of their ventures in exchange for unspecified compensation.

ConocoPhillips said in a statement that PDVSA had taken over operations at its Petrozuata and Hamaca heavy oil projects after the company failed to reach an agreement on changing the ventures to mixed companies as decreed by the Venezuelan government. It also said PDVSA had taken control of its operations at the Corocoro offshore field.

ConocoPhillips said it was in negotiations over compensation for the assets, but that it had not ruled out international arbitration if the talks were not successful.

The company said it would record an impairment of about $4.5 billion on its entire Venezuelan holdings in its second-quarter financial results.

ConocoPhillips said prior to the nationalisation of the ventures it had held a 50.1% interest in Petrozuata, a 40% interest in Hamaca and a 32.5% interest in Corocoro.

ExxonMobil said it was "disappointed" not to have reached an agreement over the nationalisation of assets today after also baulking at reducing its stake in its Cerro Negro oil sands venture.

"ExxonMobil is disappointed that we have been unable to reach an agreement on the terms for migration to a mixed enterprise structure. However, we continue discussions with the Venezuelan government on a way forward," a company spokesman said in a statement.

Italian energy company Eni said today it would maintain its 26% stake in the undeveloped Corocoro fields and would continue to operate in the country.

French giant Total said it had signed a memorandum of understanding transforming the operating company of the Sincor venture into a mixed company in which it would retain a 30.323% stake, down from 47%. PDVSA's stake in Sincor will rise to 60%. Norwegian group Statoil will retain a 10% stake in the project following the move.

Both Total and Statoil said they were satisfied with the terms of the agreement. Total said it would receive an "indemnification" based on the value of its assets while Statoil said it would receive compensation based on "negotiations of the project's future value".

Further details of the compensation terms were not given.

The Sincor project was built at a cost of $4.2 billion and is capable of producing 200,000 barrels of synthetic crude per day from the Orinoco field's bitumen deposits.

PDVSA said today it now controls 78% of the Orinoco projects. The four heavy oil ventures are valued at more than $30 billion in total and are capable of producing up to 600,000 bpd.

Tuesday, 26 June, 2007, 19:36 GMT  | last updated: Wednesday, 27 June, 2007, 00:12 GMT

Flag day: Venezuelan state oil company PDVSA has taken control of heavy oil joint ventures in its Orinoco region
 

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