Showing posts with label venezuela. Show all posts
Showing posts with label venezuela. Show all posts

27 June 2007

Exxon,Conoco quit Venezuela

ExxonMobil and ConocoPhilips wrote off multi-billion dollar investments in Venezuela today, rather than accept increasingly tough operating terms laid down by Venezuelan President Hugo Chavez.

BBC is reporting Conoco's loss at US$4.5 billion.

Chevron, BP, Total SA and Statoil will continue to work in Venezuela. BBC is reporting that Statoil will be reducing its stake to 15% in a country where, As Associated Press reports, the companies will also face flat rate taxes of 50% and royalties of 33.3% on its minor equity position.

Petro-Canada had previously announced it was abandoning its projects in the South American country.
Under Chavez, Venezuela first raised royalty and tax rates, then later assumed majority control of all oil projects as part of a larger nationalization drive of "strategic" economic sectors. Chavez says those policies are ensuring that oil benefits Venezuelans instead of foreign corporations and governments.

Rising energy prices and Venezuela's huge oil deposits have strengthened his hand: The country's reserves are the largest in the Western Hemisphere and may eventually prove bigger than Saudi Arabia's if it continues certifying heavy oil deposits in the Orinoco River region.
For a commentary on developments in Venezuela, the Financial Times offers some insights.

-srbp-

01 May 2007

Chavez seizes last private oil fields

Shortly after midnight Monday/Tuesday, Venezuelan soldiers moved in and state oil company workers in hard hats raised the Venezuelan flag over four oil fields in the Orinoco Basin.
In Orinoco, Chavez says the state will take a minimum 60 percent stake in the operations, but he is urging the foreign companies to stay and help develop the fields. They have until June 26 to negotiate the terms, including compensation and reduced stakes.

The companies appear to be taking a tough stand, demanding conditions - and presumably compensation - to convince them that Venezuela will be a good place to do business.

In a related development, Venezuela will be leaving the International Monetary Fund and the World Bank as part of Chavez's efforts to move the country away from capitalism. Chavez is also nationaliizing electricity production in the country and has threatened to seize private hispotals if health care costs continue to rise.

There are some limmits to Chavez's nationalisation. The state-owned oil company reportedly needs the continued involvement of private multi-natyions such as Chevron and ExxonMobil since the company lacks the expertise to fully exploit Venezuela's oil fields.

Mercopress, an independent news agency in Latin America, describes Tuesday's developments this way:
But in spite of the bombast, this “nationalisation” is in fact the start of a renegotiation of contractual terms that will more than likely leave PdVSA with a majority stake.

The international oil companies – ConocoPhillips, ExxonMobil, Chevron, Total, BP and Statoil – are being faced with several key issues: whether they will retain a sufficient stake to make staying worthwhile; how they are to be compensated for their reduced share; and whether they have a hope of exploiting reserves technically owned by Venezuela.

The market value of the companies’ assets in the Orinoco Belt is about $15bn (€11bn, £7.5bn) meaning $4bn-$5bn is at stake, although analysts say compensation is likely to be less given Venezuela’s threat to pay only book value.