Unions Backing Nationalization of Orinoco Oil Units

Cerro Negro
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CARACAS Jan 29, 2007 (Dow Jones Newswires)

A group of pro-government oil workers in Venezuela claims that Exxon Mobil Corp. (XOM) is rejecting a planned "nationalization" of the Cerro Negro extra-heavy oil project.

In a statement published on a pro-government Web site over the weekend, a group called the Collective Junta of Workers in the Orinoco Oil Belt for the Socialist Vanguard accused Exxon of rejecting President Hugo Chavez's demands for a majority stake in the project.

"The transnational company Exxon Mobil has told the workers themselves that it will not accept going to negotiations under the model of a mixed company, and much less a nationalization," said the statement.

In Venezuela, a mixed company refers to a firm where the state holds a majority stake.

"We are completely willing to take control of operations and management of the company to put it truly under the service of the revolutionary process and society," added the statement.

The Collective Junta added that it could take over operations at the other three Orinoco projects if needed.

Fedepetrol, the country's largest oil union that is currently negotiating a collective contract with Petroleos de Venezuela S.A., which includes workers in the Orinoco projects, downplayed the Junta's statement, saying there is no talk right now of an operational takeover in the Orinoco.

"We haven't heard of anything like that," said Gregorio Rodriguez, a Fedepetrol representative who is handling labor talks for workers at the four Orinoco projects.

He added that Fedepetrol has three times as many registered members in the Orinoco as the Collective Junta, giving it a lead role in contract negotiations.

Venezuela produces around 600,000 barrels a day of oil in the Orinoco. The four existing projects include multi-billion-dollar refineries that convert the tar oil into a synthetic grade of crude that can be exported to conventional refineries abroad.

Venezuela has said it plans to take controlling stakes of at least 60% in each of the four projects. Apart from Exxon, oil firms with stakes in the Orinoco include Chevron Corp. (CVX), ConocoPhillips (COP), BP Plc (BP), Statoil (STO) and Total (TOT).

Copyright (c) 2007 Dow Jones & Company, Inc.


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