PdVSA won't seek partners for former Exxon/Conoco fields

Nov 02, 2007 01:00 AM

Venezuela has no plans to find new partners among foreign oil companies to jointly operate the oil fields left behind by ExxonMobil and ConocoPhillips earlier this year.
"No, no, there are no plans to get new partners. That's not being considered and we're not open to that. We like having those fields in the hands of Petroleos de Venezuela," Oil Minister Rafael Ramirez said. Heavy crude upgraders located in the Orinoco area have run smoothly since the May 1 state takeover, Ramirez said, so PdVSA plans to operate former Conoco and Exxon fields unassisted.

President Hugo Chavez took controlling stakes in four key oil ventures in the Orinoco river belt as well as other profit-sharing ventures. Major oil companies were forced to accept the new terms or leave. Exxon and Conoco bowed out, while Total, Chevron, Statoil and BP chose to remain as minority partners in the Orinoco, a region that holds some of the world's largest heavy crude reserves.
The Orinoco upgraders turn tar-like heavy crude into more marketable, lighter oil. In the case of shared-profit oilfield ventures, Petro-Canada also departed.

After months of unfruitful compensation talks, Exxon has now filed for arbitration and Conoco is expected to follow suit. Conoco held a 50.1% stake in the Petrozuata venture and a 40% stake in Ameriven, another heavy-crude project. Petrozuata is now fully run by PdVSA. Conoco took a $ 4.5 bn charge in the second quarter after leaving those assets.
The spat with oil companies also affected the La Ceiba profit-sharing agreement, an operation that Exxon and Petro-Canada left behind. PdVSA is now the sole operator in this venture as well.

Few in the oil industry believe PdVSA will manage to efficiently run these projects by itself in the long run, an argument the Chavez administration calls unfair. Ramirez says the Orinoco region is operating smoothly and now produces roughly 600,000 barrels of crude a day, for a total national output of 3.2 mm bpd.
Venezuela's production figures are widelydisputed. Secondary sources, including analysts and the Paris-based International Energy Agency, say the country's real production sits closer to 2.4 mm bpd.

PdVSA, critics say, has failed to recover from a crippling oil strike in late 2002 that brought the industry to its knees.
PdVSA also suffered from Chavez's decision to fire thousands of experienced industry executives in the weeks following that incident.

Source / Dow Jones & Company
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