ChevronTexaco's South American Oil Output Slips 4% in Q3

US oil company ChevronTexaco (NYSE: CVX) produced 75,000 barrels a day (b/d) of oil in South America during the third quarter this year, 3.9% down from 78,000b/d in 3Q03, the company said in supplementary information to its Q3 earnings release.

Regional oil production stayed constant from 2Q04. Gas production in the region increased 12.5% to 450 million cubic feet a day (mcf/d) in 3Q04 from 400mcf/d in 3Q03. However, production fell 1.8% from 458mcf/d in 2Q04.

Marketing margins in Latin America increased 7.4% to US$5.26/b from US$4.90/b in 3Q03. Margins also increased 4.6% from US$5.03/b in the second quarter.

As for the recently announced royalty increase in Venezuela, ChevronTexaco says it has been officially notified of the increase, but "it's a little early to assess its precise impact," ChevronTexaco's vice president and CFO John Watson said during a conference call on Friday to discuss third quarter results.

President Hugo Chávez announced the increase to 16.6% from 1% for extra-heavy crude projects in the Orinoco belt, though the details of the increase are not yet known. "We're still talking to the government about the exact timing and impact," Watson added.

Watson noted that the royalty increase is "over a variable period of time depending on capital spending and cost recovery," but he declined to comment on the precise impact on Chevrontexaco "until we get a bit more clarification from the government of the terms of the increase."

ChevronTexaco owns 30% of the Hamaca extra-heavy crude project, while ConocoPhillips owns 40% and state oil company PDVSA has 30%.

Globally, ChevronTexaco reported net income of US$3.2bn for the third quarter 2004 compared with US$2bn in the year-ago period and US$4.1bn in 2Q04.

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