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Venezuela's PDVSA denies violating Cerro Negro bond terms
Reuters
CARACAS
Petroleumworld.com 05 14 07Venezuelan state oil company PDVSA on Saturday said it has not violated terms of a bond issue used to finance the Cerro Negro heavy oil project despite complaints by bondholders.
The statement said PDVSA received a letter last month from Deutsche Bank Trust Company Americas arguing the company had violated the original financing agreement for the project, though the statement did not provide details about Deutsche's complaint.
PDVSA on May 1 took over operations of four multibillion dollar heavy crude projects in the Orinoco basin including Cerro Negro, a joint venture between BP (BP.L: Quote, Profile , Research), Exxon Mobil (XOM.N: Quote, Profile , Research) and PDVSA. Analysts say some bondholders have interpreted this as default on the debt agreement, since the projects were originally operated by foreign oil companies.
PDVSA assured bondholders that "the potential violations have not occurred and (the company) reiterates its intention to continue cooperating to fulfill the obligations derived from the project financing agreement."
The four Orinoco projects, with an estimated value between $25 and $30 billion, have around $4 billion in outstanding debt, Venezuela's energy minister said earlier this year. Saturday's statement did not say how much Cerro Negro had in outstanding debt, though Reuters' data indicate the total is close to $1 billion.
Companies including ConocoPhillips (COP.N: Quote, Profile , Research) and Chevron (CVX.N: Quote, Profile , Research) have until June 26 to decide if they will continue as minority partners in the projects. PDVSA will take at least 60 percent as part of President Hugo Chavez's drive to increase state control over the oil sector.
Reuters 13 05 07
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