Venezuelan Orinoco Oil Joint Ventures Get Final OK
CARACAS Oct. 31, 2007 (Dow Jones Newswire)
New joint ventures involving state-owned Petroleos de Venezuela SA and foreign oil firms operating in Venezuela's Orinoco region have received a final stamp of approval, nearly a month after congress voted to pass them.
The brand new venture contracts between PdVSA and some of the world's largest oil companies include key projects along the Orinoco river belt and other profit-sharing agreements, according to a copy of the contracts published Tuesday in the latest issue of Venezuela's Official Register.
Congress originally approved the deals on Oct. 3, but they needed to be published in the Official Register to become official.
The final approval allows the ventures to export crude and other products and requires multi-million dollar deposits from minority partners Total Oil (TOT), Statoil ASA (STO) and BP PLC (BP), to get the "mixed companies" underway.
Other partners include Chevron Corp. (CVX), China's Petroleum & Chemical Corp. (SNP), or Sinopec, and Italy's Eni SpA (E).
As part of the deals, Total and Statoil will pay $130 million, while Veba Oil & Gas Cerro Negro, a branch of BP, will pay $50 million. The deal signed with Chevron doesn't include a monetary contribution clause.
Company executives have said these multi-million dollar contributions are funds the partners agreed they owed PdVSA.
The money will be subtracted from the compensation Venezuela owes these companies for taking majority stakes in the region's heavy crude upgraders, according to the contracts. The documents do not disclose PdVSA total compensation owed to these companies.
The 25-year contracts mark a radical change in the Orinoco, a region that holds some of the world's largest reserves of heavy oil. The Orinoco upgraders turn sulfurous heavy crude into more marketable, lighter oil.
The government of Venezuela President Hugo Chavez took controlling stakes in all four heavy-crude upgraders early this year as part of a nationalization campaign and offered foreign partners minority stakes.
Total, Statoil, BP and Chevron accepted the terms but Exxon Mobil (XOM) and ConocoPhillips (COP) decided to leave. In the case of shared-profit oilfield ventures, Petro-Canada (PCZ) also departed.
PdVSA's compensation talks with Conoco and Exxon have so far failed to reach a resolution. Exxon has already filed for arbitration and Conoco has said it will soon follow suit, but claims it remains open to continued discussions.
In the final contracts, the Sincor oil upgrader becomes "Petrocedeno Mixed Company", where PdVSA owns 60%, Total controls 30.323% and Statoil keeps a 9.677% stake.
Cerro Negro, another upgrader, will become the "Petromonagas Mixed Company" with PdVSA controlling an 83.33% stake and a BP subsidiary holding the rest.
Similarly, at the Ameriven project now renamed "Petropiar Mixed Company", PdVSA will hold 70% and Chevron will own 30%.
In the case of shared-profit ventures, PdVSA will keep a 74% stake in the Western Paria Gulf's Corocoro oilfield while Eni will keep a 26% stake.
In the case of the Posa field, China's Sinopec will hold a 32% stake, local oil company Ineparia 8% and PdVSA 60%.
Finally, in the Eastern Paria Gulf field, PdVSA keeps "an initial" stake of 64.25%, while Eni takes a 19.50% stake and Ineparia will hold 16.25%.
The La Ceiba area, previously controlled by Exxon and Petro-Canada, remains in PdVSA's hands. The Petrozuata upgrader, in which Conoco held a stake, is also solely run by PdVSA now.
Copyright (c) 2007 Dow Jones & Company, Inc.
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