Venezuela: Contracts Could Be Canceled if Output Demands Not Met
CARACAS - Venezuela's government could revoke contracts of 10 small partner companies in the nationalized oil industry if they fail to meet the state's demands to increase production, Oil Minister Rafael Ramirez told reporters Friday.
The government, which has laid out ambitious plans to raise production capacity over the next several years, wrote to all of its partners in November 2010 calling on them to boost output.
"At this moment we have identified 10 companies with problems, four of which are very critical," Mr. Ramirez said. "I'm going to make the call again. If they don't complete the plans then I will have to go to the National Assembly and say that these companies are not fulfilling what they promised," he said, warning that those not meeting their targets could have their contracts canceled.
The minister declined to name the companies but said that "they are very small" and include some that produce no more than 30 barrels a day.
"Time is up. I hope that the companies come and talk to us," Mr. Ramirez said.
He added that large partners like U.S. oil major Chevron Corp. (CVX) and China National Petroleum Corp. (CNPC.YY) have already responded to the government's demands and now he is waiting for the smaller companies to follow suit.
Under late President Hugo Chavez, who died in March, Venezuela's government revised contract terms with its oil partners to give the state a larger claim on oil projects. Some companies like ConocoPhillips (COP) and Exxon Mobil Corp. (XOM) rejected the new terms and are now seeking billions in compensation from Venezuela through international arbitration courts.
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