Several big-name foreign oil firms in Venezuela agreed Wednesday to turn over majority control of their operations in the oil-rich Orinoco River to the country`s state-owned petroleum company.
BP PLC, Chevron, Total SA of France and Norway`s Statoil ASA all signed agreements during a ceremony agreeing to give Petroleos de Venezuela SA a controlling hand in the projects as mandated in February by President Hugo Chavez.
According to Venezuelan officials, Exxon Mobil Corp. signed an agreement with PDVSA earlier Wednesday in private.
Two other projects were also signed over to Venezuelan majority control Wednesday: the Gulf of Paria East offshore oil field that China`s Sinopec had planned to develop and La Ceiba oil field, a project of Exxon Mobil.
Orinoco River, however, is considered to be the most lucrative oil reserve in the country, currently pumping some 600,000 barrels per day. Only one major player in Orinoco, Houston-based ConocoPhillips, did not sign a majority takeover agreement Wednesday, prompting warnings from Venezuelan oil officials the projects there could be seized, by force, if the U.S. company does not come to some agreement before the May 1 deadline. Venezuelan Energy Minister Rafael Ramirez issued the warning, saying he thought ConocoPhillips would come around ahead of next week`s deadline.
'Next Tuesday, May 1st, the Venezuelan State, through PDVSA, is taking control over the operations of all of the premises currently affected by the nationalization law,' he said. May 1 marks the period by which Chavez said all oil companies in Orinoco must sell -- for what was termed a fair market price -- enough shares in their projects to give PDVSA at least a 60-percent majority share. Chavez raised international concern in late February when he first announced the Orinoco takeover bid, shortly after announcing his plans to acquire controlling stakes in several sectors of the Venezuelan economy. 'Venezuela`s privatization of oil has come to an end,' said Chavez, who then promised to complete the task by international Workers` Day on May 1 and hoist the Venezuelan flag over the previously private projects.
Chavez`s decision to take over Orinoco could spell bad news for foreign oil, warn some analysts and Chavez critics, the concern being the Orinoco project could be more than PDVSA is ready to handle. Though Chavez has spent billions of dollars on social projects and discount oil for friends and foes alike, not nearly enough of the Venezuelan oil wealth has been reinvested in new equipment, personnel or training, leaving the state firm woefully unprepared to handle the rigors of the reserve`s heavy crude. On the economic front, some warn Venezuela isn`t financially equipped to pay the market share it promised to acquire the percentage of Orinoco projects the government covets.
Others expressed concern the heavy hand of bureaucracy will devastate the industry. For the most part, foreign firms in Venezuela have operated there with little government interference. Venezuela has renegotiated some oil contracts in the last few years, though with soaring global oil prices, both sides appeared content with maintaining the status quo as long as they both earned billions in petrodollars. Chavez`s policy aimed at reining in foreign oil interests was bolstered by his landslide electoral victory in December and widespread support in both the legislative and judicial branches of government. Combined with high oil prices and an agenda aimed at consolidating his power for years to come, it appears there is little standing in his way. 'For years, oil companies acted like the Chavez aim at taking over the oil sector didn`t exist,' said PFC Energy analyst Roger Tissot. 'But now that conditions are in his favor, Chavez can move full-speed ahead.'
BP PLC, Chevron, Total SA of France and Norway`s Statoil ASA all signed agreements during a ceremony agreeing to give Petroleos de Venezuela SA a controlling hand in the projects as mandated in February by President Hugo Chavez.
According to Venezuelan officials, Exxon Mobil Corp. signed an agreement with PDVSA earlier Wednesday in private.
Two other projects were also signed over to Venezuelan majority control Wednesday: the Gulf of Paria East offshore oil field that China`s Sinopec had planned to develop and La Ceiba oil field, a project of Exxon Mobil.
Orinoco River, however, is considered to be the most lucrative oil reserve in the country, currently pumping some 600,000 barrels per day. Only one major player in Orinoco, Houston-based ConocoPhillips, did not sign a majority takeover agreement Wednesday, prompting warnings from Venezuelan oil officials the projects there could be seized, by force, if the U.S. company does not come to some agreement before the May 1 deadline. Venezuelan Energy Minister Rafael Ramirez issued the warning, saying he thought ConocoPhillips would come around ahead of next week`s deadline.
'Next Tuesday, May 1st, the Venezuelan State, through PDVSA, is taking control over the operations of all of the premises currently affected by the nationalization law,' he said. May 1 marks the period by which Chavez said all oil companies in Orinoco must sell -- for what was termed a fair market price -- enough shares in their projects to give PDVSA at least a 60-percent majority share. Chavez raised international concern in late February when he first announced the Orinoco takeover bid, shortly after announcing his plans to acquire controlling stakes in several sectors of the Venezuelan economy. 'Venezuela`s privatization of oil has come to an end,' said Chavez, who then promised to complete the task by international Workers` Day on May 1 and hoist the Venezuelan flag over the previously private projects.
Chavez`s decision to take over Orinoco could spell bad news for foreign oil, warn some analysts and Chavez critics, the concern being the Orinoco project could be more than PDVSA is ready to handle. Though Chavez has spent billions of dollars on social projects and discount oil for friends and foes alike, not nearly enough of the Venezuelan oil wealth has been reinvested in new equipment, personnel or training, leaving the state firm woefully unprepared to handle the rigors of the reserve`s heavy crude. On the economic front, some warn Venezuela isn`t financially equipped to pay the market share it promised to acquire the percentage of Orinoco projects the government covets.Others expressed concern the heavy hand of bureaucracy will devastate the industry. For the most part, foreign firms in Venezuela have operated there with little government interference. Venezuela has renegotiated some oil contracts in the last few years, though with soaring global oil prices, both sides appeared content with maintaining the status quo as long as they both earned billions in petrodollars. Chavez`s policy aimed at reining in foreign oil interests was bolstered by his landslide electoral victory in December and widespread support in both the legislative and judicial branches of government. Combined with high oil prices and an agenda aimed at consolidating his power for years to come, it appears there is little standing in his way. 'For years, oil companies acted like the Chavez aim at taking over the oil sector didn`t exist,' said PFC Energy analyst Roger Tissot. 'But now that conditions are in his favor, Chavez can move full-speed ahead.'
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