ExxonMobil: Pequiven Cancels US$3bn Olefins Project

US-based oil major ExxonMobil (NYSE: XOM) and Venezuela's state petrochemicals firm Pequiven will no longer partner in the US$3bn Jose petrochemicals project to produce specialty petrochemicals known as olefins, ExxonMobil confirmed to BNamericas in an email on Tuesday.

"On January 20, Pequiven informed ExxonMobil Chemical that Pequiven would not be able to complete the José petrochemicals project feasibility study under the terms and conditions agreed in August 2004 and therefore have elected to terminate the Project Development Agreement (PDA)," the email said.

"We have regretfully accepted Pequiven's decision and hope to continue our relationship," ExxonMobil said.

ExxonMobil also remains open to discuss future opportunities with Pequiven, the email said.

Caracas daily El Nacional carried news of the project's demise on its front page on Tuesday. Pequiven could search for another partner for the project, the paper reported, quoting unnamed government sources.

The paper also reported that ExxonMobil had "abandoned" the project as part of a strategy by the world's largest oil company to reduce its presence in Venezuela.

ExxonMobil has opted out of the offshore Mariscal Sucre natural gas project in eastern Venezuela in which state oil company PDVSA now plans to partner Brazil's federal energy company Petrobras (NYSE: PBR) and sold its stake in the Quaimare-La Ceiba operating service agreement to Spanish firm Repsol YPF (NYSE: REP) rather than accept the terms of a new joint venture controlled by PDVSA.

ExxonMobil's only current project in Venezuela is a stake in Cerro Negro, a project to upgrade extra-heavy crude from the Orinoco oil belt.

A Pequiven official contacted by BNamericas declined to confirm the report, but said the firm would "make its position known" later on Tuesday (Feb 7).

As late as December 16, Pequiven's top brass was telling reporters the project with ExxonMobil was proceeding without a hitch. Pequiven director Raúl Romay told BNamericas on that day his company and ExxonMobil planned to raise US$1.8bn in the financial markets for the project and that the partners would seek to finance the remaining US$1.2bn themselves.

"The partners will put up 40%, we will seek to finance the remaining 60%," according to Romay. Of the remaining US$1.2bn needed to complete the project, Pequiven's US$600mn has already been set aside, he added. Romay even gave a date for plant construction, in early 2007.

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