Venezuela Urges ExxonMobil to Accept PDVSA-Controlled JV

Quiamare-La Ceiba Field, Venezuela
(Click to Enlarge)
US oil major ExxonMobil (NYSE: XOM) will not be allowed to participate in new business opportunities with Venezuela's state oil firm PDVSA unless it agrees to change its Cuaimare-La Ceiba operating agreement to a joint venture controlled by PDVSA, energy and oil minister and PDVSA president Rafael Ramírez told BNamericas, confirming local press reports.

ExxonMobil is also forbidden to expand its existing operations in the country, including the Cerro Negro extra-heavy crude upgrader, until it accepts the new JV, according to Ramírez said.

"We have our selection process for companies. Right now, [ExxonMobil] are not eligible for new businesses," he said.

Nineteen companies in 31 operating agreements representing production of 532,240 barrels a day (b/d) have now signed preliminary agreements to migrate to new joint ventures in which PDVSA will have an average 60% stake.

Only ExxonMobil is still holding out ahead of the December 31 deadline to accept the new terms.

The government of Hugo Chávez reportedly sent ExxonMobil an ultimatum in the last few days asking the company to follow the lead of the other oil majors in the country by signing the preliminary agreement.

As a result local press reported that ExxonMobil is now reevaluating its position in the country.

The Cuaimare-La Ceiba field is operated by ExxonMobil with a 25% stake and partner Spain's Repsol YPF (NYSE: REP) owns the remaining 75%. The field produces 15,000b/d in eastern Venezuela.

PDVSA and ExxonMobil are still discussing the terms of a JV for La Ceiba, Ramírez said.

"We are working and are waiting," the official said. "We hope they eventually appreciate what we have and sign before December 31. We are not walking down the street, finger-wagging and threatening people."

PDVSA and ExxonMobil are partners in several high-profile joint ventures, including Cerro Negro, the billion-dollar Orinoco oil belt project that produces 100,000b/d-plus of synthetic crude, and Chalmette, the Louisiana-based, built-to-spec refinery where that crude is processed.

PDVSA has announced it plans to launch several new business opportunities in 2006, including tenders for at least three new E&P offshore licenses.

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