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U.S. oil majors at odds with Venezuela
Orinoco belt extra heavy oil upgrader facility at the Jose Petrochemical complex, in Venezuela
By Elio Ohep
Petroleumworld
CARACAS
Petroleumworld.com 05 10 07
Jim Mulva, Dave O'Reilly, and Rex Tillerson CEO's from US oil majors, the first one from Conoco Phillips, the second from Chevron, and the later from ExxonMobil are all in a battle with the venezuelan government to get an amicable resolution over the migration of their heavy crude oil strategic partnerships in Orinoco belt to the new joint ventures where the Venezuelan State is to hold of a majority stake.ConocoPhillips, is the only oil major in Venezuela that has not agreed in principle to Venezuela control of its operations, while Chevron, Exxonmobil and other oil majors, affected by the move that include Total and Chevron Corp., BP PLC, and Norway's Statoil have in principle signed a MOU to that effect.
Venezuelan Oil Minister Rafael Ramirez has said ConocoPhillips would be expelled from the country if it continues to resist the takeover by not signing the country's agreement.
Mulva, however, said they complied fully with the transfer of its operations last month to Venezuela's oil company, PDVSA.
"We accept, we acknowledge ... the operatorship is transferred," Mulva said, to reporters Wednesday, wires services reported.
Mulva, spoke to reporters Wednesday after the company's annual shareholders meeting, and did not said why it has stopped short of signing the country's agreement. He did said his focus is on compensation and ongoing commercial terms for operations in Venezuela, where ConocoPhillips initial investment was $2.6 billion.
"Our direction and our emphasis are all toward finding an amicable solution by which ConocoPhillips can continue in these projects," Mulva said.
Chevron's David O'Reilly does not rule out leaving Venezuela.
" If economic terms are not good, we are going elsewhere," O'Reilly told a group of business executives in Chicago, Monday, Reuters reported.
However, O'Reilly said he was confident the energy company would be able to resolve disagreements surrounding its heavy-oil investment in Venezuela.
"We will satisfactorily work our way through the situation," "If economic terms are good, we are staying, O'Reilly added, according to Dow Jones news story.ExxonMobil's Rex Tillerson said unless the negotiations produced a profitable proposal, "everything else is moot because we won't be staying."
"I'm realistic. I've said to them it may not work out," Tillerson said, two weeks ago, before he agree with the transferring with the operations to PDVSA, AP reported.
ExxonMobil the world's largest publicly-traded oil company
Venezuelan energy Minister and PDVSA's CEO Rafael Ramirez has said he estimated the projects are currently worth about $25 billion -- lower than outside estimates of $30 billion.
But Venezuela would not provide cash compensation to the foreign oil companies for their debts. Ramirez said the government had no intention of reimbursing the companies for those debts, which he estimated at $4 billion.
The oil companies have until June 26 to negotiate terms.
On May 1, Venezuela took control of four extra heavy crude operations at the Orinoco Belt Basin and upgraders, Cerro Negro, Ameriven, Petrozuata and Sincor that have a capacity to produce over 600,000 barrels a day of extra heavy crude oil of 8-12 API an convert it into medium grade 28-32 API synthetic oil.
Chevron has a 30 percent stake in Hamaca project, Conoco owns a 40 percent stake in this strategic partnership, and PVSA has a participation of 30 percent.
ConocoPhillips has a 50.1% stake in Petrozuata, while PDVSA owns the rest.Exxon owns a 41.7 per cent stake in the Cerro Negro venture, as does PDVSA. The remaining 16.6 per cent is owned by BP.
The forth heavy oil project is SINCOR where Total and Statoil own the majority of the venture with PDVSA as a minority partner.
A new venezuela legislation mandate that PDVSA own at least 60% of any oil operations in the country.
The Orinoco Belt 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.
- Elio Ohep, editor@petroleumworld.com, 58 412 996 3730, Caracas
PetroleumworldNews 09 05 07
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