15-11-05 Despite increasing pressure from the Venezuelan government on foreign oil companies to share their profits with the government, Statoil sees Venezuela's plentiful oil and gas reserves playing a crucial role in the company's future exploration and production plans, Thore E. Kristiansen, president of Statoil's Venezuelan operations, said.

Including extra heavy oil reserves in the Orinoco belt, Statoil estimates that Venezuela has more than 300 bn barrels of untapped oil. These reserves are simply too large for a global energy company to discount, regardless of the political risk, Kristiansen said, speaking at a conference here hosted by Bank of America.
"It's a country where oil and gas reserves are potentially larger than Saudi Arabia's," Kristiansen said.

Venezuelan President Hugo Chavez has increased taxes on foreign oil producers doing business in the country and is seeking larger ownership stakes for the government in foreign-sponsored oil projects.
"It certainly is a challenge to operate in Venezuela in the current environment," Kristiansen said.

A law enacted in 2001 significantly increased taxes and royalties that must be paid by foreign oil projects to the government. This has already impacted Statoil's Sincor field, in the Orinoco belt, and its LL 652 field at Laka Maracaibo, which is currently in the process of being designated a "mixed company" as defined by the 2001 law.
An energy project with this designation must grant the Venezuelan government a majority ownership stake in the company.

Before the 2001 law, foreign oil investors paid about 1 % in royalties to the government.
"We are in constant discussions with the government to see how this can be redone," Kristiansen said.