Minister: Total Decision Could Jeopardize Sincor Expansion

French oil major Total's (NYSE: TOT) decision not to enter into a partnership with Venezuela's state oil firm PDVSA threatens the former's opportunities for future business in the country, Venezuela's energy and oil minister and PDVSA president Rafael Ramirez told BNamericas.

When asked specifically about the possibility of an expansion of the Sincor joint venture between PDVSA, Total and Norway's Statoil (NYSE: STO) that manufactures some 190,000 barrels a day (b/d) of synthetic oil from Orinoco extra-heavy crude, Ramírez said: "Sincor II? No, not under those terms [offered by Total]. There are many companies out there."

Ramirez made the comments on the sidelines of a press conference to announce the 22 new JVs PDVSA signed with 16 foreign and domestic oil companies last week to operate 25 fields.

Total, along with Statoil and Italy's Eni (NYSE: ENI) refused to accept PDVSA's terms, prompting the state oil company to seize Total's Jusepin oil field and Eni's Dacion field.

Jusepin, Dacion and five smaller fields PDVSA will now operate produce a total 115,000b/d, Ramirez said.

Ramirez said Total offered a last-minute arrangement on Friday night, minutes before the contracts were to be signed, that displeased the Venezuelan side, a strategy the minister likened to the letter the Japanese ambassador delivered to the US State Department five minutes before the Pearl Harbor attack on December 7, 1941.

The relationship between Total and Venezuela has soured since last year, when the government unilaterally decided to increase the royalty rate for Sincor from 1% to 16% and then accused Sincor of "overproducing" and threatened to levy a surcharge of 30% on every barrel produced above the 100,000b/d mark.

The four strategic associations that manufacture synthetic crude from Orinoco oil belt extra-heavy crude are now producing a combined 549,001b/d. Venezuela's total production is some 3.27 million b/d.

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