ConocoPhillips Optimistic Corocoro 'Will Go Forward'

US oil company ConocoPhillips (NYSE: COP) is optimistic its Corocoro oil project in Venezuela will go forward despite the fact state oil firm PDVSA rejected its 2005 investment plan.

"You are going to see these issues sorted out, resolved, and Corocoro going forward," ConocoPhillips' chairman and CEO Jim Mulva told investors and reporters during a conference call Wednesday. "Relationships with the Venezuelan authorities are very good from my perspective," he added.

Mulva said that the sides are talking and added: "I do not think you will see a delay" in the Corocoro schedule. Corocoro was expected to start initial production of some 70,000 barrels a day (b/d) of oil in the second half of 2006.

Last week, energy and oil minister and PDVSA's president, Rafael Ramírez, said Venezuela is seeking to renegotiate contracts with foreign firms for projects such as Corocoro, arguing that the terms are unfavorable for Venezuela.

ConocoPhillips planned to start drilling 14 wells in the Corocoro oil field last December, but the ministry rejected its proposed 2005 investment plan which it said was US$200mn below what had been previously agreed.

Under the current terms, PDVSA pays operators about 48% of the West Texas Intermediate (WTI) oil benchmark price for each barrel it buys at the wellhead. Foreign private operators such as ConocoPhillips contribute about 400,000b/d of oil to Venezuela's total production of 2.6 million b/d.

The Corocoro field - discovered by ConocoPhillips in 1999 and declared open for commercial use in 2002 - is a key component of Venezuela's plans to raise production to 5mb/d by 2009.

ConocoPhillips has a 32.5% operating interest in the Corocoro field. Its partners are Eni (26%), the Overseas Petroleum and Investment Corporation (Opic) subsidiary of the Taiwanese China Petroleum Company (CPC), which has 6.5%, and PDVSA's CVP subsidiary with a 35% stake.

Also on Wednesday, ConocoPhillips reported global fourth-quarter net income of US$2.43bn, up from US$1.02bn for the same period a year ago.

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