Meanwhile, foreign state oil firms like Russia's Gazpromneft and China National Petroleum Corp. are seeking bilateral agreements with Venezuela's state oil giant Petróleos de Venezuela, or PDVSA.
"Venezuela's final objective is not to kick out the private companies, but rather to increase the amount of taxes they pay," said Roger Tissot of PFC Energy, a Washington-based consulting firm. "Chavez is in a position to have some companies go, because others are lining up to get in."
Total said Friday it is talking to PDVSA about investing in a $5 billion expansion of a heavy-oil joint venture, said the French company's chief executive, Thierry Desmarest. But there are still mixed opinions about what's going on.
Some analysts speculate that Friday's meeting shows the increasing involvement of Chavez himself in negotiations with oil companies. Others say Venezuela is using strong-arm tactics to force companies into contracts under the tougher terms of the new hydrocarbons law.
Recent moves by the Venezuelan government to increase tax revenues from its foreign operators have hit ConocoPhillips hard due to its exposure in Venezuela. The Houston company has a 32 percent stake in the Corocoro field, as well as 40 percent participation in Block 2 of the offshore Deltana Platform natural gas reserves.
In addition, the company has a significant stake in two multibillion-dollar heavy crude upgraders that turn Venezuela's tarry Orinoco oil into synthetic crude. Chavez, a firebrand leftist and sworn enemy of President Bush, last November abruptly ended a royalty holiday negotiated in the 1990s, boosting royalty payments from 1 percent to 16.6 percent. .............***
This week, Mr. Chávez signed deals with Brazil that include the likely acquisition of at least a dozen light- attack aircraft.
At the same time, Venezuela is negotiating with Russia to purchase as many as 50 Mig-29 SMT fighter jets (the most advanced type) to replace its American-made F-16s. This on top of an agreement to buy 40 Russian military helicopters and 100,000 Kalashnikov rifles.
Washington protested to Moscow last week, citing the potential of a "destabilizing effect on the hemisphere." But the Russians shot down the complaint, and Chávez once again chided the US for "meddling."
Specifically, the US is concerned the weapons will find their way into rebel hands in neighboring Colombia. There, President Alvaro Uribe is trying to put down a longstanding leftist insurgency and fight the drug trade. Colombia is Washington's close ally, and the largest recipient of US security aid outside the Middle East.
Colombia and Venezuela verged on war in 1987, when the two were locked in a territorial dispute. This week, they managed to defuse a political crisis over a wanted Colombian rebel who had a bounty on his head and had been kidnapped from Venezuela. Bogota accuses the leftist government in Caracas of harboring insurgents.
Washington is concerned about Chávez's antidemocratic course and his plans to divert Venezuelan oil from the US to China. How the populist leader handles his economy is one thing, but embarking on a potential arms race with Colombia (and thus the US), and beefing up the military while cracking down on Venezuelans' liberties, is not just his affair. [End]