Skip to comments.Chavez Seizes Private Oil Resources
Posted on 04/03/2006 7:16:44 PM PDT by Aussie Dasher
President Hugo Chavez has tightened his grip on Venezuela's energy resources, following through on threats to punish international companies that resist government control of the nation's oil fields.
Venezuela seized two oil fields from France's Total SA and Italy's Eni SpA after the companies failed to comply with a government demand that operations be turned over to state oil company Petroleos de Venezuela SA, or PDVSA, Oil Minister Rafael Ramirez said Monday.
"Those two companies resisted adjusting to our laws," he said at a news conference. "Those fields return to total, absolute control by Petroleos de Venezuela."
Until PDVSA took control of the oil fields Saturday, Total and Eni had operated them under contract. Some other companies, including Exxon Mobil Corp., decided to sell their stakes among the 32 Venezuelan oil properties rather than go along with the new terms.
Ramirez, asked if companies that resist will be forced out of Venezuela, replied: "We don't have a veto against any company here." But he added: "Companies that don't adjust to our laws, we don't want them to continue in the country."
Venezuela's weekend seizures were the first as part of Chavez's effort to draw more revenue from companies pumping crude in the South American country.
Private oil companies had run 32 oil fields in Venezuela independently under contract with the government. But Venezuela demanded last year those contracts be changed into so-called "mixed company" joint ventures that give PDVSA a minimum 60-percent stake.
Many companies have accepted the new terms without a fight, apparently betting the ventures would still be profitable even with a larger share of revenue going to the state.
Venezuela has been emboldened to take a harder line due to rising oil prices, political instability in the Mideast and Nigeria, and new buyers in Asia. Light sweet crude for May delivery rose 11 cents to settle at $66.74 a barrel Monday on the New York Mercantile Exchange.
Ramirez said 20 companies, including Spanish-Argentine Repsol YPF, Royal Dutch Shell PLC and China National Petroleum, representing 25 oil fields have signed on to the new legal framework to create joint ventures. Another five oil fields were voluntarily returned to PDVSA after companies with stakes decided to turn them over rather than operate them as joint ventures. Ramirez declined to say if those companies, which include Repsol and Japan's Teikoku Oil Co., would be compensated financially.
The new joint ventures will allow PDVSA to save $31.34 billion over the next 12 years, PDVSA director Eulogio del Pino told reporters. Under the old contracts, PDVSA was forced to buy oil from the companies at five times the cost of extraction.
Total spokeswoman Patricia Marie told The Associated Press that PDVSA had rejected an alternate offer made by the company for its 30,000 barrel-a-day Jusepin oil field in eastern Venezuela.
"We didn't migrate the field ... and PDVSA took it," Marie said by phone from Total's Paris headquarters.
Ramirez said it was "unacceptable" that Total had made an offer demanding a higher stake just 15 minutes before it was supposed to sign on to the new joint ventures at a ceremony Friday. Under a previous 1993 agreement, PDVSA had awarded Total a 55 percent stake in oil pumped at Jusepin, with BP PLC holding 45 percent.
Ramirez said BP will be compensated with an increased stake at a separate field.
Meanwhile, Italy's Eni SpA protested PDVSA's seizure of the Dacion oil field and said it expected to be compensated for a "violation of contract rights."
PDVSA told the company that its contract had been terminated and that it would appoint personnel to manage operations at the site, Eni said in a statement. "It is Eni's intention to offer PDVSA a period of time in which a full reparation of Eni's contract rights can be agreed," it said.
Eni, which had a 100-percent stake in the field, said it would take legal action if an agreement could not be reached.
"We're ready to go to the celestial court if they want but, of course, companies that come here with litigation and confrontation will not be invited" to join future projects, Ramirez said. "We at least have the right to choose our partners."
The Venezuelan government also claims Eni and Total owe millions of dollars in unpaid taxes.
Some companies have sold their stakes instead of facing the changes, including Irving, Texas-based Exxon Mobil, which sold its holdings in the 15,000-barrel-a-day Quiamare-La Ceiba field in December to its partner, Repsol.
Norway's Statoil ASA said Monday it, too, had sold its 27 percent share in the LL 652 oil field in Lake Maracaibo to PDVSA.
Those companies, as well as Total, retain other investments in Venezuela.
How much longer is this guy going to last? Venezuela is not Cuba. I can't believe Chaves is not eventually going to PO the wrong guy or guys and they are just going to have him whacked.
It would sort of be nice if those foreign companies at least blew up the facilities before leaving.
I'm not sure it would do any good to kill him. I doubt anyone taking his place would return a single nationalized oil field. If it were going to be done, it should have been long ago.
National Socialism is alive and well in South America.
Great, more oil control under this dictator's thumb.
Tyrants....Liberals love em!
Like all Socialist's..
They are shooting that "wad too soon!
Venezuela at this point needs a few Wyatt's Torches.
The only thing that would be keeping Venezuela from imploding in the near future would be the Chicoms propping it up, effectively making Venezuela a PRC client state. I would seriously consider tasking some Keyholes to make regular passes - be interesting what may be found.
As for inside Venezuela, a lot of good PdVSA people are out of work due to not being "politically reliable", in fact the government has called them "stupid, mentally deficient". I have worked with some of these people. They would agree that Chavez needs to take a dirt nap.
The reputation of the French preceed them.
He has no reason to fear the french so he does not give a poop.
Now the Itallians...
I have two Venezuelan friends, either one would bust a cap in that pandejo's butt.
Hey, dont forget he's Jimmy Carter's best friend too!!
But then again Jimmy never met a dictator he never loved.
Have you ever seen "Sorcerer" with Roy Scheider?
Give it a viewing.
That will free up some funds for Exxon investment in
Alaskan oil and natural gas.
Conoco-Phillips too? Conoco-Phillips likes investing in Alaska, so far anyway.
Is Cheraq going to slap him?? Is Goober going to kiss him?
Pray for W and Our Freedom Fighters
I know that Conoco-Phillips has interests in Venezuela as I have a distant relative working for them there. I'm just wondering what Conoco-Phillips has done if anything and if the country is safe for Americans. I am so ignorant of the oil business and everything about it that I'm almost embarrassed to ask.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.