PDVSA to Recognize, Pay E&P JV Debts

Venezuela's state oil company PDVSA will recognize and pay debts accrued by domestic and foreign oil companies that have agreed to sign new E&P joint ventures, company CFO Eudomario Carruyo told BNamericas.

"There is a plan to recognize the debts they have on their books and start amortizing them," Carruyo said.

Although a debt figure was not available, the official said the US$1bn PDVSA has set aside for financing its share in the new JVs this year will cover the amount.

Carruyo added that no company that migrated from the old operating agreements into the new joint ventures, where PDVSA is to have at least 60%, has balked at the conditions.

"They are all interested. Operations [in those fields] are completely normal," according to the CFO. The fields are producing some 500,000 barrels a day, PDVSA said.

Last week the state oil company submitted the new JV model contract to the national assembly.

Following a meeting with the assembly's energy committee, company president and energy and oil minister Rafael Ramirez said the assembly should approve the new model by April 1.

In 2005, Venezuela's government ordered oil companies with 32 operating agreements to migrate to PVDSA-controlled JVs as part of President Hugo Chavez's campaign for more state control over the sector.


In related news, Rafael told the committee PDVSA wants the assembly to impose a 33.3% royalty - more than double the existing rate - and a 50% tax rate on oil projects.

Venezuela was the first country to develop the 50:50 principle in the mid-1940s whereby the host country receives in royalties and taxes half of what the oil company makes. Eventually adopted worldwide, the principal became the standard for almost 60 years.

Imposing a tax-plus-royalties formula of more than 80% is again setting a landmark in relations between states and oil companies.

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