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ExxonMobil and ConocoPhillips to negotiate their Venezuelan exit
Reuters/Francesco Spotorno
Venezuelan Energy Minister Rafael Ramirez (R) and Venezuelan Eni President
Massimo Moshini (C) sign MOU at the PDVSA headquarters in Caracas June 26, 2007.By Elio Ohep
Petroleumworld
CARACAS
Petroleumworld.com 06 27 07The big oil majors ExxonMobil and ConocoPhillips will have to negotiate within two moth their exit from Venezuela, after they failed to agree to migrate their projects to a Venezuelan joint venture with a majority control by the venezuelan oil company PDVSA, Rafael Ramirez, Venezuela's minister of energy said on Tuesday.
In a speech during the ceremony of signing the MOU with the migrated companies, Ramirez stressed that ExxonMobil and Conoco Phillips will have two months to finish their negotiations to liquidate their holding in Venezuela and leave the country.
ExxonMobil spokesman in Venezuela Richard Bailey said in an statement: ”ExxonMobil is disappointed that we have been unable to reach an agreement on the terms for migration to a mixed enterprise structure. However, we continue discussions with the Venezuelan government on away forward.” PDVSA will take over the stake of ExxonMobil in Cerro Negro heavy-oil venture and in La Ceiba field, a risk and profit sharing project.
ConocoPhillips declined to comment on the matter. PDVSA will be assuming full ownership of ConocoPhillips' stake in the Petrozuata and Hamaca heavy-oil ventures and the offshore Corocoro, a risk and profit sharing development project, that was been developing with Italy's Eni. ConocoPhillips' affected interests are worth $4.5 billion. Venezuela accounts for about 4% of ConocoPhillips' global oil and gas production.
Ramirez, congratulated Total, Statoil, Chevron, BP, ENI, Sinupetrol, and the Venezuelan company Ineparia, for agreeing in the migration, signing a memorandum of understanding, as a minority partner in their present JV in the Orinoco Belt and/ or Risk and Profit sharing JV.
Ramirez said, they (oil companies) have agreed with the Venezuelan Government on the main terms and conditions for its participation in the new partnership company to be created from the existing ones. PDVSA will have stakes from 60 percent to 83 percent in the ventures.'PDVSA has gone from holding an average 39 pct participation to a participation of 78 pct on average,' Ramirez said.
The combined value of 78 pct stake is estimated around $30 billion.
Due to the exit of ConocoPhillips and Exxonmobil, Chevron and BP's stakes remain unchanged in their respective ventures, Ameriven and Cerro Negro, but Total participation in Sincor declined from 47 percent to 30.3 percent, and Statoil from 15 percent to 9.7 percent.
"Negotiations have been tough as expected, but have been conducted in a professional and fair manner with satisfactory results for both parties", said Thore E. Kristiansen, president of Statoil Venezuela.
This agreement is the second of a three phase process for the migration of the orinoco belt strategic associations and Risk and profit sharing companies in various parts in Venezuela.
There are still important issues that are being worked with the Government and PDVSA before submitting the document for the National Assembly for final approval, Ramirez said.
In the Memorandum of Understanding signed all parties they have agreed with the Venezuelan authorities on compensation terms and governance conditions that make it possible for them continue as a partner on this projects.The four Orinoco projects, Cerro Negro, Hamaca-Ameriven, Petrozuata and Sincor have a production capacity of 600,000 barrels per day and valued at more than $30 billion.
The Orinoco belt boast estimated reserves up to 300 billions, the largest oil reserve on the planet.
Exxon Mobil ended the day with a 0.7% loss to end the day at $81.82., while ConocoPhillips slipped 2.9% to end the day at $75.80.
- Elio Ohep, editor@petroleumworld.com, 58 412 996 3730, Caracas.
Petroleumworld 26 06 07
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