Total, BP Get $250M in Compensation for Jusepin

CARACAS Mar 05, 2007 (Dow Jones Newswires)

Total SA's (TOT) new Chief Executive Christophe de Margerie said Monday he saw a bright future for the French oil major in Venezuela after a deal with its partner BP PLC (BP) which sees them relinquish control in the Jusepin oil field to the government in exchange for $250 million in compensation.

"Neither BP nor Total will forget the experience with Jusepin" he said after signing agreement to terminate operating contracts on the field.

Venezuela's Energy and Mines Minister Rafael Ramirez said it would set aside $250 million "to pay what is still pending" on the Jusepin field.

He applauded BP, which had a 45% stake, and Total, with 55%, for overcoming contract problems on the 35,000 barrel-a-day Jusepin field "in an intelligent way."

Ramirez said that the contractual wrangles surrounding Jusepin were now "a closed chapter."

State-run Petroleos de Venezuela, PdVSA, seized control of Jusepin last April after Total, the former field operator, rejected the terms of a new joint venture with PdVSA firmly in control.

In November, Ramirez said PdVSA had already reached an agreement to compensate Total for the Jusepin seizure.

He said at the time that Total would be able to expand heavy crude operations in the Orinoco basin after resolving the Jusepin issue.

Total's de Margerie said Monday that "the Orinoco represents an opportunity for the future."

The agreement has no bearing on BP's contract to extract heavy oil from the Orinico region, a company spokesman said.

It is satisfied with the outcome of the negotiations on Jusepin and has already transferred its two other operating service agreements at the Boqueron and DZO fields to PdVSA, the spokesman added.

Ramirez also said Exxon Mobil Corp. (XOM) would hand off operatorship of the 105,000 barrels-a-day Cerro Negro oil project by May 1 to PdVSA and a transition committee would be created Monday to speed the process.

A government official said it wasn't clear whether the U.S. oil major would retain a minority stake in the project.

Copyright (c) 2007 Dow Jones & Company, Inc.