Lawmakers to Review New PDVSA E&P JVs

Venezuela's national assembly has set up a special committee to review the new contracts for exploration and production joint ventures with state oil firm PDVSA, according to an article in Caracas daily El Universal.

The committee will discuss the new contracts with the energy and oil ministry and then present the results to the country's legislative assembly.

"We will discuss with the ministry the instrument to legalize these enterprises," committee chairman Rodrigo Cabezas was quoted as saying.

Private companies holding 32 operating agreements with PDVSA producing some 500,000 barrels a day (b/d) of crude agreed in 2005 to migrate to preliminary JV agreements.

PDVSA president and energy and oil minister Rafael Ramirez said on Monday that PDVSA would have a stake in each new JV of between 60% and 70%.

Another hot issue the committee will consider is that of Sincor, one of the four strategic associations that produces extra-heavy oil from the Orinoco oil belt and upgrades it into synthetic crude.

The energy and oil ministry not only increased the royalty rate for Sincor to 16.7% from 1% in early 2005 but also announced a surcharge of 30% for excess production, arguing that Sincor was only authorized to produce up to 100,000b/d of oil but is now producing well over 200,000b/d. The surcharge will be levied on the "excess" 100,000b/d.

The four extra-heavy crude upgrading projects in Orinoco - Ameriven, Petrozuata, Sincor and Cerro Negro - in which PDVSA partners oil majors such as US firms ConocoPhillips (NYSE: COP) and ExxonMobil (NYSE: XOM) and France's Total (NYSE: TOT) - are producing slightly below 600,000b/d of syncrude, according to the December figures from the International Energy Agency (IEA).

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