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Venezuela warns Exxon Mobil
By Natalie Obiko Pearson
The Associated Press
CARACAS
Petroleumworld.com 03 31 06
Venezuela had a blunt message this week for Exxon Mobil, one of the world's most powerful oil companies: Get off my crude-rich turf.
Venezuela is tightening its squeeze on the oil industry, telling oil companies to give the state a greater share of profits — or get out.Oil Minister Rafael Ramírez on Wednesday said Exxon Mobil was one of the companies that would "prefer to leave ... rather than adjust" to recent policy changes.
"We said we don't want them to be here then," Ramírez told state TV, adding, if "we need them, we'll call them."
Exxon Mobil indicated Thursday it had no plans to pull out.
"ExxonMobil de Venezuela continues to have a long-term perspective of its activities in Venezuela," it said in an e-mail to The Associated Press.
The flap helped push the price of oil above $67 a barrel on the New York Mercantile Exchange on Thursday as the market reacted to the latest sign of tighter state control of energy around the globe.
Venezuela is taking on Big Oil at a time when rising oil prices, political instability in the Mideast and Nigeria and new buyers in Asia have put the world's fifth-largest oil exporter in a winning position.
After snubbing Exxon Mobil, Ramírez said Venezuela has other eager partners, including state companies from Russia, Iran, China and India, as well as traditional oil companies.
The new climate has given Venezuela the flexibility to diversify "away from Western investors and incorporate state-owned companies from allied countries ... more willing to abide by new, tighter terms," said Patrick Esteruelas, analyst at the Washington-based Eurasia Group.
The government has increasingly sought projects with state-controlled oil companies in friendly countries. Last year, Venezuela granted exclusive licensing rights to certify and quantify reserves in blocks in the Orinoco tar belt to seven companies, including China's CNPC, India's ONGC and Iran's Petropars. The only Western oil major included was Spanish-Argentine company Repsol YPF.
The trend is driven by President Hugo Chávez's distaste for corporate multinationals, which he accuses of looting his country's oil wealth over the years. He enjoys strong support for his efforts to take more industry profits for use in social programs for the nation's poor.
Since taking office in 1999, his government has passed legislation requiring a majority government stake in all oil-production projects and increased taxes and royalties on oil companies.
Thursday, congress approved guidelines to turn 32 privately run oil fields over to state-controlled joint ventures.
Among the terms faced by companies such as Royal Dutch Shell and France's Total: a minimum 60 percent stake for the state oil company Petróleos de Venezuela SA (PDVSA) in each field; PDVSA controlling the boards of the new joint ventures; and a jump in income-tax rates from 34 percent to 50 percent and royalties from 16.6 percent to 33.3 percent. They will also see their potential drilling acreage slashed by almost two-thirds.
Texas-based Exxon Mobil has often been the lone challenger to the government. It was the only company to reject the new joint-venture agreements. Instead, in December, it sold off its stake in the 15,000 barrel-a-day Quiamare-La Ceiba field to its partner Repsol YPF.
When other companies agreed without a struggle to a royalty increase in the Orinoco tar belt in 2004, Exxon Mobil had threatened international arbitration.
Since then, PDVSA has ousted Exxon Mobil from a multibillion-dollar petrochemicals project, claiming the company did not meet timetables.
Experts say, however, that fears that Chávez is seeking to drive out private investment are exaggerated because Venezuela needs the technological expertise of major Western oil companies to develop its vast deposits in the Orinoco belt.
Few state oil companies have the expertise to upgrade the extra-heavy oil and tarlike bitumen found in the Orinoco into lighter, marketable oils.
Notably, Exxon Mobil continues to hold a 41.7 percent stake in the 120,000-barrel-day Cerro Negro heavy oil upgrading project in the Orinoco along with partners British Petroleum and PDVSA.
AP 30 03 06
Copyright © 2006 AP. All Rights Reserved.
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