AVHI: PDVSA Needs to Respect Present Contracts

Venezuelan state oil firm PDVSA needs to observe to the letter present contracts with private oil companies if the country is ever to attain the goal of increasing production to 5.8 million barrels a day (Mb/d), Luis Xavier Grisanti, president of the AVHI association that groups private oil companies, told Union Radio Friday.

Reaching the target requires "a close relationship and cooperation between the state oil company and the private sector, a process of affirming legal security when the rules for the hydrocarbons law are finalized [by the national assembly] and the joint venture agreements, as well as contractual stability, which is important for undertaking new investments," said Grisanti, a former deputy president at PDVSA.

The 5.8M b/d goal was published by PDVSA last year and the company said it hopes to achieve it by 2012.

The hydrocarbons law must be "really an instrument to stimulate investment," Grisanti added. The oil industry official seems to suggest that private companies will not readily play along with additional changes to the rules that govern the industry in Venezuela.

Over the past two years, for example, Orinoco extra heavy oil projects have had their royalty rates increased to 16.66% from 1% first and then to 33.33%, while foreign companies involved in operating agreements with PDVSA had their contracts forcibly changed to joint ventures dominated by the state firm.

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