Royal Dutch Shell Plc  .com Rotating Header Image

AP Worldstream: Venezuela signs agreements with foreign oil companies to create joint ventures

Apr 01, 2006
President Hugo Chavez said 17 Venezuelan and foreign companies agreed on Friday to turn privately run oil fields into joint ventures controlled by the country's state oil company.
Under the new joint ventures, state-run Petroleos de Venezuela SA, or PDVSA, will hold a minimum 60 percent stake in the new partnerships, splitting oil revenues with the private companies.
The new pacts that convert 32 privately run oil fields into 30 joint ventures are replacing old agreements that gave private companies a bigger share.
“Now we are associates and this commits us much more, it's a more solid framework, it's no longer a contract for doing a service, it's a strategic alliance,” Chavez told representatives of the companies at the signing ceremony at the presidential palace.
“We all come out winning here, nobody is going to lose here,” said Chavez, adding that Venezuela would be “steering” the strategies of the new joint ventures.
Exxon Mobil Corp., the world's second-largest integrated oil company, and Italian oil and gas company Eni SpA did not sign the agreements.
Exxon avoided the new terms by selling its stake in the 15,000-barrel-a-day Quiamare-La Ceiba field in December to its partner, Repsol, while Eni was not permitted to participate in the joints ventures due to pending tax debts in Venezuela.
Spanish-Argentine Repsol YPF, Royal Dutch Shell PLC and China National Petroleum were among the 17 Venezuelan and foreign oil companies that agreed to the new legal framework.
Congress approved new oil-field guidelines on Thursday.
All of the companies involved in the joint ventures must sign individual contracts with PDVSA, which then must be approved by lawmakers.
The terms faced by the companies will include:
_PDVSA controlling the boards of the new joint ventures.
_A jump in income tax rates to 50 percent from 34 percent.
_A hike in royalties to 33.3 percent from 16.6 percent.
Participants also will see their potential drilling acreage slashed by almost two-thirds.
Nemesio Fernandez-Cuesta, Repsol's vice president of exploration and production, said before the signing ceremony that accepting the overhaul meant acknowledging Venezuela's right to control the joint ventures.
“We, the businesses here, are showing with our presence and our signature, adherence to national sovereignty,” Fernandez-Cuesta said.
Venezuela is putting the squeeze on major oil companies at a time when rising oil prices, political instability in the Mideast and Nigeria and new buyers in Asia have put the world's fifth-largest oil exporter in a strong negotiating position.
“Today is a historic day because the 'oil opening,' which was the way toward privatizing Petroleos de Venezuela, will become part of history,” Chavez said earlier Friday. “Petroleos de Venezuela will never be privatized.”
The 32 affected oil fields currently pump about 460,000 barrels of oil a day. Venezuela estimates its total production at more than 3 million barrels a day, although industry analysts estimate the figure is lower.
The state oil company announced the contract overhaul last year, saying past governments granted giveaway contracts to private companies.
After signing the agreements Friday, private oil companies are expected to negotiate the details of individual contracts before the contracts are sent to the National Assembly for approval.
The U.S. remains the top buyer of Venezuelan oil. But Chavez, a fierce critic of Washington, is seeking new markets for oil in places from the Caribbean to China.
“We want to share it with the world, but don't tread on us,” Chavez said. “We are going to share. There is oil there for 100 years and more.”
Copyright 2006 Associated Press

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.