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Venezuela's PDVSA running the Orinoco Belt petroleum projects
AP Photo/Fernando Llano
Venezuela's President Hugo Chavez, center, delivers a speech to oil workers at Jose Antonio Anzoategui oil complex near Puerto La Cruz, Venezuela, Tuesday, May 1, 2007.
By Elio Ohep
Petroleumworld
JOSE, Venezuela
Petroleumworld.com 05 02 07On Monday, April 30, just at midnight in a live televised transmission, Rafael Ramirez Minister of energy and petroleum and venezuelan oil company PDVSA president, took over the control room of Ameriven's upgrader at Jose Cryogenic Complex, in Anzoategui state, on the northeastern coast of venezuela. At the same time, Luis Vierma E & P vice president for PDVSA did the same over the field operations of Petrozuata oil project at the Orinoco Belt south the city of San Tome, in Anzoategui state, southeastern venezuela.
"Venezuela is to exercise its right to manage natural resources on people’s behalf," Rafael Ramírez said on television during the take over.
"Welcome to the new PDVSA," he told workers, that now will be part of PDVSA's work force.
On Tuesday, May 1, at 2 pm, also in a live televise transmission, under a fly-over by venezuelan Russian-made Sukhoi fighter jets, venezuelan president Hugo Chavez, celebrated at Jose, with at least 5.000 thousands of workers dressed in red overalls and hats, hailing the nationalization of the venezuelan petroleum crude resources.
"Today is the end of that era when our natural riches ended up the hands of anyone but the Venezuelan people," Chávez said of Venezuela's last foreign-controlled oilfields, situated in the Orinoco Belt during the speech.
" This is the true nationalization of our natural resources," Chavez told the crow.
"Today, we are ending this perverse era," Chavez added.
"We have buried this policy of the opening up of our oil ... an opening that was nothing more than an attempt to take away from Venezuelans their most powerful and biggest natural resource," he said to the workers.
The affected companies Cerro Negro (Exxon Mobil and BP), Ameriven and Petrozuata (Chevron and Conoco), Sincor (Total, and Norway's Statoil) gave up the control of the operations to PDVSA in the four Orinoco extra heavy crude oil projects, but all the companies still have to agree with the terms and conditions under which they will be allowed to stay on as minority partners.The move announced in January, is Chavez's main effort to take complete government’s control over the country's economy.
The four projects are valued at more than $30 billion and pump around 400.000 barrels per day (bpd) of heavy crude oil of 8 API an convert it into medium grade 32 API synthetic oil. The four projects capacity is 600.000 bpd.
PDVSA also took control over three other oil fields from Conoco's, manage under a risk and profit association with PDVSA as a minority partner, Corocoro and Paria East and West offshore fields.
Conoco is the most exposed of any foreign oil company operating in Venezuela, not having signed a formal agreement recognizing the migration of operations to PDVSA.Luis Vierma, told Dow Jones, PDVSA was waiting until late Monday for Conoco to sign the operating memorandum, "but they didn't show any interest."
He added that Conoco executives failed to turn up for nationalization take over at there Petrozuata project.Eulogio Del Pino, PDVSA executive in charge of the Orinoco Belt said to reporters when asked if the company could buy back the Orinoco's projects debts.
" We are evaluating many possibilities, and that is not the only one," Del Pino.
He added that all the Orinoco projects are generating profits and that there is no risk what so ever of these projects not meeting bond payments.The foreign companies are now our minority partners, however, we need to "evaluate" if Conoco will remain a partner in the Petrozuata and Hamaca joint ventures, he said.
Sources close to the negotiation said to Petroleumworld, "Conoco still in serious negotiating with PDVSA, they have to think twice before not doing so, 10% of the company's booked reserves are located in Venezuela".The first nationalization of the venezuelan oil industry was done in 1976, when venezuela nationalized all foreign company assets and shut companies out the oil sector completely, but in 1992, the government took steps to bring technology and capital, beginning a series of new projects with PDVSA as a minority partner. Chavez is now reversing the track.
The venezuelan take over of the oil belt operations is expected to have little impact on 1.5 mbd oil exports to the United States. Venezuela’s oil exports to the US only accounts in January of this year for about 8.8 percent from 12.5% in January of 2005 of American crude oil imports ranking behind Canada, Mexico and Saudi Arabia.
The Orinoco Belt Basin is the world's largest petroleum reserves, is an area of 55,314 square kilometers containing 1.3 trillion barrels of extra-heavy hydrocarbons, and its recovery is expected about 20 percent, that is, 260 billion barrels could be pumping out with the help of cutting-edge technology, AFP reported.
With the Belt reserves Venezuela's resources could sum up 316 billion barrels and bring Venezuela's as number one oil reserves holder, more than Saudi Arabia, which accounts for 264 billion barrels, followed by Canada, Iran and Iraq.
Venezuela's current output is under 3.0 mbd.
- Elio Ohep, editor@petroleumworld.com, 58 412 996 3730, Caracas.
Petroleumworld News 05 01 07
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