Conoco and Exxon resist Venezuelan takeover

Negotiations between the Venezuelan government and two oil companies -ConocoPhillips and Exxon- failed. They were discussing the terms of an operation reduction in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Venezuela's oil-rich Orinoco belt and a smooth takeover of their current projects. However, they are still negotiating with Venezuelan government as ConocoPhillips announced it would take this oil dispute for compensation to international arbitration. US State Department asked Venezuelan government to contemplate proper compensation for both departing oil companies. ConocoPhillips anounced a US$4.5 bn loss to be compensated for.  

According to Reuters, ConocoPhillps would get more damage from a Venzuelan exit as it has "more substantial holdings in the country ". It earned over $800 million from its Orinoco projects last year. Chevron, Statoil, BP and Total-Fina did agree to enter into joint ventures with the Venezuelan government. Under the terms of their agreement, they would hold a maximum 40 percent stake in the oil enterprise and transfer their USD 30-billion 600,000 bpd projects to the Venezuelan government.  They will remain in the Orinoco belt project with a reduced participation. Their final deal will be submitted to Congress within two months. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />  Negotiations started on May 1, 2007 when the Venezuelan government decided to have local oil company PDVSA manage heavy crude Orinoco belt as part of President Hugo Chavez's nationalisation drive.  The government had set June 26, as the deadline for the oil companies to transfer their projects to PDVSA.  After signing agreements with foreign oil companies today, PDVSA controls 78% of Orinoco belt projects . Venezuelan oil minister, Rafael Ramirez confirmed that both Conoco and Exxon are to leave their Orinoco belt projects and continue to negotiate compensation.  Two more oil companies -Sinovensa and Petro-Canada - also decided to leave their Orinoco Belt projects to Venezuelan PDVSA alone.

 

Local Newspaper El Universal says Ryder Scott Petroleum Consultants has stated Venezuelan oil reserves at Orinoco Belt are the biggest one in the world. Venezuela is the fourth-largest exporter of oil to the US.

 

Sources: El Universal, Bloomberg Aljazeera, BBC Reuters CNN FT Banca y Negocios Globovision Unionradio Petro-Canada RNV FT El Pais Xinhua

 

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