PdVSA Won't Seek Partners for Former Exxon, Conoco Fields

CARACAS, Nov 2, 2007 (Dow Jones Newswires)

Venezuela has no plans to find new partners among foreign oil companies to jointly operate the oil fields left behind by Exxon Mobil Corp. (XOM) and ConocoPhillips (COP) earlier this year.

"No, no, there are no plans to get new partners. That's not being considered and we're not open to that. We like having those fields in the hands of Petroleos de Venezuela," Oil Minister Rafael Ramirez said Thursday in remarks to the press.

Heavy crude upgraders located in the Orinoco area have run smoothly since the May 1 state takeover, Ramirez said, so PdVSA plans to operate former Conoco and Exxon fields unassisted.

President Hugo Chavez took controlling stakes in four key oil ventures in the Orinoco river belt as well as other profit-sharing ventures.

Major oil companies were forced to accept the new terms or leave. Exxon and Conoco bowed out, while Total SA (TOT), Chevron Corp. (CVX), Statoil ASA (STO) and BP PLC (BP) chose to remain as minority partners in the Orinoco, a region that holds some of the world's largest heavy crude reserves.

The Orinoco upgraders turn tar-like heavy crude into more marketable, lighter oil.

In the case of shared-profit oilfield ventures, Petro-Canada (PCZ) also departed.

After months of unfruitful compensation talks, Exxon has now filed for arbitration and Conoco is expected to follow suit Friday.

Conoco held a 50.1% stake in the Petrozuata venture and a 40% stake in Ameriven, another heavy-crude project. Petrozuata is now fully run by PdVSA. Conoco took a $4.5 billion charge in the second quarter after leaving those assets.

The spat with oil companies also affected the La Ceiba profit-sharing agreement, an operation that Exxon and Petro-Canada left behind. PdVSA is now the sole operator in this venture as well.

Few in the oil industry believe PdVSA will manage to efficiently run these projects by itself in the long run, an argument the Chavez administration calls unfair.

Ramirez says the Orinoco region is operating smoothly and now produces roughly 600,000 barrels of crude a day, for a total national output of 3.2 million barrels a day.

Venezuela's production figures are widely disputed. Secondary sources, including analysts and the Paris-based International Energy Agency, say the country's real production sits closer to 2.4 million barrels a day. PdVSA, critics say, has failed to recover from a crippling oil strike in late 2002 that brought the industry to its knees.

PdVSA also suffered from Chavez's decision to fire thousands of experienced industry executives in the weeks following that incident.

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