Ramirez: Cerro Negro, Sincor Resisting Nationalization



Two of the Orinoco extra-heavy crude oil projects Venezuela's government aims to nationalize are resisting the move, energy and oil minister Rafael Ramirez said.

Venezuela's government now aims to nationalize the four Orinoco projects, which include E&P and crude-upgrading assets. The government said last week it only planned to nationalize upgrading assets.

"Cerro Negro is declaring force majeure, saying they will not be able to make deliveries to Chalmette. And Sincor is saying they want us to reconsider. But there is nothing to be negotiated," said Ramirez, who also heads state oil firm PDVSA.

A Cerro Negro official confirmed news of the force majeure to BNamericas, declining to offer additional detail. Chalmette, a refinery in Louisiana, processes Cerro Negro crude.

The companies made their position known in two letters to Ramirez's office. "We want to share these reactions from the foreign companies in the [Orinoco] belt with the whole country," Ramirez said.

Foreign oil companies that operate in the Orinoco projects will be allowed "minority stakes," Ramirez said, without specifying the size of the shares.

PDVSA subsidiary CVP will operate Orinoco after nationalization comes into effect, Ramirez said. CVP president Eulogio del Pino last year said his company was seeking a 60% minimum stake in Orinoco.

The Orinoco projects are capable of producing roughly 620,000b/d of extra-heavy crude in four projects: Ameriven, where state oil company PDVSA has 40%; Cerro Negro, where PDVSA has 41.67%; Sincor, where PDVSA has 38%; and Petrozuata, where the state company has 49.9%.

Sincor is the largest, with nearly 200,000b/d. Cerro Negro produces more than 100,000b/d.

Private-sector partners in Orinoco include ExxonMobil (NYSE: XOM), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX), Statoil (NYSE: STO), Total (NYSE: TOT) and BP (NYSE: BP).

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