Chevron Exec Encouraged By Venezuela's New Oil Auction Terms
BOGOTA (Dow Jones), Dec. 3, 2009
A Chevron Corp. executive called the Venezuelan government's new terms for its Carabobo heavy oil drilling tender an improvement, and said he thinks the revisions are most likely the final draft.
"It's encouraging that they've continued to improve the terms," Wes Lohec, Chevron's managing director for Latin America, said Wednesday. "I don't think there will be any further changes in the terms. These are the terms with which we'll have to make our bid decision."
Venezuela's government on Tuesday sent interested oil companies, including Chevron, revised terms for the project to encourage participation. The project has been delayed several times amid concerns raised by some companies on issues such as how much they would have to pay in royalties and taxes, and what decision-making roles firms would have. The drilling would be done as joint ventures with Venezuela's state oil company Petroleos de Venezuela, or PdVSA.
Lohec, who was speaking to reporters at an oil conference in Bogota, did not comment on what specific changes were made to the terms.
With the new, and apparently final terms in their hands, oil companies now have until mid to late January to study them and then submit a bid. Each block could involve costs ranging from $10 billion to $20 billion, which could include construction of an upgrader to turn the tar-like crude into a more marketable, lighter oil.
Apart from Chevron, other firms considering a bid include Chinese state oil firm CNPC, BP PLC and France's Total SA.
Being auctioned are a handful of heavy and extra-heavy oil blocks in the eastern Orinoco region, where vast, retrievable reserves are virtually guaranteed. Winning companies, or consortiums of two or more firms, would get a 40% stake in each project, while PdVSA would reserve a majority 60%.
The government is hoping the project will help boost Venezuela's oil production capacity over the coming years by at least 1.2 million barrels a day.
The country's production capacity currently stands at about 3.2 million barrels per day. In 2008, Venezuela was the world's 10th-largest oil producer and the largest in South America, according to the Energy Information Administration.
The Carabobo project would also provide a much-needed infusion of foreign investment into Venezuela, whose economy has fallen into a recession recently. A drop in oil prices from its 2008 record highs is partly to blame, as oil sales account for more than half of government revenue and about nine-tenths of exports.
Copyright (c) 2009 Dow Jones & Company, Inc.
- Eni Secures Two Deals for Oman Blocks (Jan 14)
- BP Plans to Drill 6 More Wells in Azerbaijan (Jan 10)
- GOM Subsea Contract Goes to TechnipFMC (Jan 09)
Company: Total S.A. more info
- Deepwater Nigeria Field Starts Production (Jan 02)
- Total Spuds Well Offshore South Africa (Dec 27)
- Total to Start Crude Exports From New Field Offshore Nigeria (Dec 20)
Company: Chevron Corporation more info
- Transocean Lands $830MM Rig Contract with Chevron (Dec 28)
- Premier Oil Eyes Bid for Chevron's North Sea Assets (Dec 13)
- Big Oil Battles Prolonged Gender Problem (Dec 04)
Company: PDVSA more info
- Venezuela Will Remap its Caribbean Oil, Gas Prospects (Jan 09)
- Gasoline Shortages Grip Venezuela's Capital (Dec 20)
- Venezuelans Face Gasoline Shortages (Nov 01)
Company: CNPC more info
- CNPC Plans Internal Consolidation To Fast-Track Gas Storage Upgrade (Jun 01)
- Total at Risk of Losing Gas Field Stake to CNPC If It Quits Iran (May 07)
- China's CNPC Sells First Gasoline To Americas As Fuel Stocks Hit Record (Apr 03)