BP, Shell and CGC Agree to Migrate Contracts to New JVs in Venezuela

Venezuela's government signed agreements with British oil major BP, Anglo-Dutch oil company Shell and Argentine firm CGC on Thursday to change their existing oil operating agreements to new joint ventures controlled by state oil firm PDVSA, energy and oil minister and PDVSA president Rafael Ramirez told reporters.

A total 15 companies with 26 operating agreements have so far signed preliminary agreements to migrate to the new JVs, leaving five companies in six operating agreements still holding out ahead of the December 31 deadline for all companies to accept the new terms or have their assets seized by PDVSA.

Ramírez called for the five companies that have not yet signed to follow in the footsteps of the 15 that have. "The migration from the operating agreements to JVs is a fundamental part of our development plan in the hydrocarbons sector," Ramírez said after announcing the new agreements. "We are appealing to all the foreign capital present in the country so we can keep on reaching agreements."

Shell operates the Urdaneta Oeste field, BP operates two fields, DZO and Boqueron, and CGC is the operator of Onado. All the fields are in Zulia state in eastern Venezuela.

Reaching agreements with oil majors such as Shell and BP is a credit to the skills of PDVSA negotiators as until now the company had only succeeded in bringing local companies, smaller independents or companies owned by countries friendly to the Chávez administration into the fold. However, majors such as US company Chevron, France's Total and Norway's Statoil are still not biting and Ramírez has vowed to take over production in their fields if an agreement is not reached by December 31.

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