Re: Venezuela Tightens Grip on Oil Industry
- From: Scotius <wolvzbro@xxxxxxxx>
- Date: Fri, 31 Mar 2006 00:56:41 -0800
On Thu, 30 Mar 2006 20:07:05 -0800, Captain Compassion
<daranc@xxxxxxxxxxxxxxxxx> wrote:
Venezuela Tightens Grip on Oil Industry
By NATALIE OBIKO PEARSON, AP Business Writer
Thu Mar 30, 5:11 PM ET
http://news.yahoo.com/s/ap/20060330/ap_on_bi_ge/venezuela_oil_offensive
CARACAS, Venezuela - Venezuela had a blunt message this week for Exxon
Mobil, one of the world's most powerful oil companies: Get off my
crude-rich turf.
Venezuela is tightening its squeeze on the oil industry, telling oil
companies to give the state a greater share of profits ? or get out.
Oil Minister Rafael Ramirez on Wednesday said Exxon Mobil Corp. was
one of the companies that would "prefer to leave ... rather than
adjust" to recent policy changes.
Yeah, and it's not like they wouldn't be making any profit if
they did share more with Venezuela, it's just that no amount is ever
enough for them. Chavez is a trouble maker though. There are a lot of
useful things he could do for the Venezuelan people, and beyond by
virtue of example, but if he gives the US government an excuse to take
him out (such as urging leftists around the World to "Bring it [the
US] down!"), they probably will.
"We said we don't want them to be here then," Ramirez told the state
TV broadcaster adding, if "we need them, we'll call them."
Exxon Mobil indicated Thursday it had no plans to pull out.
"ExxonMobil de Venezuela continues to have a long-term perspective of
its activities in Venezuela," it said in an e-mail to The Associated
Press.
The flap helped push the price of oil above $67 a barrel on the New
York Mercantile Exchange on Thursday as the market reacted to the
latest sign of tighter state-control of energy around the globe.
Venezuela is taking on Big Oil 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 winning
position.
After snubbing Exxon Mobil, Ramirez said Venezuela has other eager
partners, including state companies from Russia, Iran, China, India,
as well as traditional oil companies.
The new climate has given Venezuela the flexibility to diversify "away
from Western investors and incorporate state-owned companies from
allied countries ... more willing to abide by new, tighter terms,"
said Patrick Esteruelas, analyst at the Washington-based Eurasia
Group.
The government has increasingly sought projects with state-controlled
oil companies in friendly countries. Last year, Venezuela granted
exclusive licensing rights to certify and quantify reserves in blocks
in the Orinoco tar belt to seven companies, including China's CNPC,
India's ONGC and Iran's Petropars. The only western oil major included
was Spanish-Argentine company Repsol YPF.
The trend is driven by President Hugo Chavez's distaste for corporate
multinationals, which he accuses of looting his country's oil wealth
over the years. He enjoys strong support for his efforts to take more
industry profits for use in social programs for the nation's poor.
Since taking office in 1999, his government has passed legislation
requiring a majority government stake in all oil production projects,
hiked taxes and royalties on oil companies, and begun to collect
millions of dollars in what it claims are unpaid taxes from them.
On Thursday, congress approved new guidelines to turn 32 privately run
oil fields over to state-controlled joint ventures.
Among the terms faced by companies like Royal Dutch Shell PLC and
France's Total SA: a minimum 60 percent stake for the state oil
company Petroleos de Venezuela SA (PDVSA) in each field; PDVSA
controlling the boards of the new joint ventures; and a jump in income
tax rates from 34 percent to 50 percent and royalties from 16.6
percent to 33.3 percent. They will also see their potential drilling
acreage slashed by almost two-thirds.
Irving, Texas-based Exxon Mobil has often been the lone challenger to
the government.
It was the only company to reject the new joint-venture agreements.
Instead, in December, it sold off its stake in the 15,000 barrel-a-day
Quiamare-La Ceiba field to its partner Repsol YPF.
When other companies agreed without a struggle to a royalty hike in
the Orinoco tar belt in 2004, Exxon Mobil had threatened international
arbitration.
Since then, PDVSA has ousted Exxon Mobil from a multibillion-dollar
(euro) petrochemicals project, claiming the company did not meet
timetables for starting the project.
Experts say, however, that fears that Chavez, a close ally of Cuba's
Fidel Castro, is seeking to drive out private investment are
exaggerated because Venezuela needs the technological expertise of
Western oil majors to develop its vast deposits in the Orinoco belt.
Few state oil companies have the expertise to upgrade the extra-heavy
oil and tar-like bitumen found in the Orinoco into lighter, marketable
oils.
Notably, Exxon Mobil continues to hold a 41.7 percent stake in the
120,000-barrel-day Cerro Negro heavy oil upgrading project in the
Orinoco along with partners British Petroleum PLC and PDVSA.
It is also partnered with PetroCanada in the La Ceiba field, each
holding a 50 percent stake.
.
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