Chevron: Terms of JV with PDVSA Could Change Before Approval

The terms and conditions of US oil major Chevron's (NYSE:CVX) joint venture agreement with Venezuela's state oil firm PDVSA could change before they are finally approved by the national assembly, Chevron officials told reporters and analysts during a conference call on Friday.

On Wednesday, the national assembly's energy and mines commission approved the 21 joint venture contracts, including Chevron's, paving the way for final approval by the assembly in full session on May 2 or May 4.

At the end of March, Chevron signed an MOU with the government specifying terms for the conversion of its operating service agreement to a joint venture with PDVSA for its Boscán and LL652 fields in western Venezuela's Zulia state.

"At this point the conversion has not been finalized, the terms now require the approval of the Venezuela's national assembly, we are waiting for that to happen and it's always conceivable the terms could change in some way," Chevron VP and CFO Steve Crowe said during the call.

While Crowe declined to specify what could change, he seemed confident Chevron's equity on the JVs' production will be respected. Production from Boscan, with output of over 100,000 barrels a day "will be equity production," perhaps the greatest change from operator status, Crowe said.

Crowe also seemed confident the value of the investments his company carried out in Boscan will be fully recognized by the government.

Chevron also fielded questions on a proposed increase in the tax rate to 50% from 34% for the Ameriven Orinoco extra-heavy crude project in which Chevron partners (30%) with PDVSA (40%) and fellow US major ConocoPhillips (30%). On this last point Rowe said "it's way too early" to measure the impact of the tax increase.

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