Chevron is keeping the door open:U.S. oil company to work with Venezuela after its peers Exxon Mobil

[Judi Lynn]

Source: Houston Chronicle

June 27, 2007, 10:23PM
Chevron is keeping the door open
U.S. oil company to work with Venezuela after its peers Exxon Mobil and ConocoPhillips decide to bow out

By KRISTEN HAYS
Copyright 2007 Houston Chronicle

Chevron Corp. is the last U.S. oil major standing in Venezuela's resource-rich Orinoco River basin after Exxon Mobil Corp. and ConocoPhillips this week refused to capitulate to new working terms imposed by Venezuela's government-controlled oil company.

While Chevron gave up operating an oil production pro- ject like its peers, the company retained its 30 percent interest in the Hamaca project.

The San Ramon, Calif., company's continued presence also maintains access to its significant natural gas plays elsewhere in Venezuela, which experts say is likely enough incentive to give in on the Orinoco.

"They are relatively minor in the Orinoco, but they are a big player in the gas sector," said Patrick Esteruelas, an analyst with political risk consultancy Eurasia Group. "Not to play ball on one side of the business is to shut down all other opportunities in the country."

Chevron spokesman Leif Sollid said Wednesday that its negotiations with Petróleos de Venezuela, or PDVSA, were acceptable, and "we look forward to continuing our long-standing partnership with Venezuela and the Hamaca project's success."


Read more: http://www.chron.com/disp/story.mpl/business/4926547.html

[Judi Lynn]

1. Oil majors tread pragmatic path

Oil majors tread pragmatic path
By Ed Crooks and Benedict Mander in Caracas

Published: June 27 2007 21:36 | Last updated: June 27 2007 21:36

Confronted by Hugo Chávez’s determination to take control of Venezuela’s heavy oil upgraders, the international oil companies were between a rock and a hard place.

They could either accept participation on the new terms, in which they would be junior partners to PdVSA, Venezuela’s state oil company, and expected to write cheques for new investment over which they would not have full control – or walk away from assets worth billions of dollars.

Faced with that decision on Tuesday, Chevron of the US, Total of France, BP of the UK and Statoil of Norway chose to bite their lips and stick around.
(snip/...)

http://www.ft.com/cms/s/98ba0c4c-24d4-11dc-bf47-000b5df10621.html

[Judi Lynn]

2. ConocoPhillips Sees 2Q $4.5 Billion Impairment On Venezuela Project

ConocoPhillips Sees 2Q $4.5 Billion Impairment On Venezuela Project

June 26, 2007: 05:59 PM EST


DOW JONES NEWSWIRES

ConocoPhillips (COP) expects to record a $4.5 billion impairment of interest, before and after tax, in its second-quarter financial statements, as a result of pulling out of Venezuelan oil fields.

The Houston-based oil company said it was unable to reach an agreement with the Venezuelan government on control over the Corocoro, Petrozuata and Hamaca fields. Petroleos de Venezuela SA and its affiliates will take over control of the fields.

http://money.cnn.com/news/newsfeeds/articles/djf500/200706261759DOWJONESDJONLINE000787_FORTUNE5.htm

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ConocoPhillips exit from Venezuela not to affect co's long-term rating - Moody's
06.27.07, 3:12 AM ET

MUMBAI (Thomson Financial) - Moody's Investors Service commented it does not expect ConocoPhillips' withdrawal from any further operations or investment in Venezuela to have an impact on the company's 'A1' long-term and 'Prime-1' commercial paper ratings.

ConocoPhillips (nyse: COP - news - people ) will not remain as a minority partner in the Petrozuata and Hamaca heavy oil projects, or in the Corocoro field development but could continue to negotiate compensation terms for its interests in Venezuela.
(snip/...)

http://www.forbes.com/markets/feeds/afx/2007/06/27/afx3860629.html

[Judi Lynn]

3. Petrobras, PdVSA to Invest at Carabobo (Venezuela)

Petrobras, PdVSA to Invest at Carabobo
Associated Press 06.28.07, 4:51 PM ET


Brazil's state-run oil company Petrobras and Venezuela's PdVSA will invest $2 billion in the development of Venezuela's Carabobo block in the Orinoco heavy oil belt, the Brazilian company said Thursday.

The two companies expect to start output from the extra-heavy field in 2009, Petrobras spokeswoman Carolina Rocha said.

Petrobras, or Petroleo Brasileiro SA (nyse: PBR - news - people ), will take a 40 percent stake in the project, while PdVSA, or Petroleos de Venezuela SA, will have 60 percent, Petrobras International Director Nestor Cervero told the Folha de S. Paulo newspaper, Brazil's largest.

The increase of activities by Petrobras in Venezuela comes as some private companies are leaving the Orinoco region.
(snip)

http://www.forbes.com/feeds/ap/2007/06/28/ap3868857.html

[Judi Lynn]

4. It's our oil

It's our oil
Jun 28th 2007 | CARACAS
From The Economist print edition

Exeunt Exxon and Conoco

WHEN Venezuela's government announced this week that two American oil giants, Exxon Mobil and ConocoPhilips, would walk away from their large investment in the Orinoco heavy-oil belt rather than accept tough new contract terms, officials presented it as the recovery of sovereignty over another slice of the country's all-important oil industry. Some other Venezuelans saw a government blunder that could accelerate the decline of the state oil company, Petróleos de Venezuela (PDVSA). Either way, the impact of the walkout may not be immediate.

The companies were among those attracted to Venezuela in the 1990s, under the terms of an oil “opening” that the leftist government of President Hugo Chávez has now pronounced shut. In common with other big oil producers, Venezuela has substantially raised its tax take from private oil producers as its bargaining power has risen along with the oil price. Now it has also completed the process of obliging all foreign companies to accept minority shares in joint ventures with PDVSA.

Seven of the 11 companies operating in the Orinoco belt, including Chevron of the United States, Britain's BP and France's Total, agreed to the new terms. Along with Exxon and Conoco, Petro-Canada and Opic, a Taiwanese company, did not. Venezuela will pay compensation, possibly running into billions of dollars. Conoco said it had “preserved all legal rights including international arbitration”.

“For us, there is no cost,” insisted Rafael Ramírez, the oil minister who also acts as chairman of PDVSA. “There is an important gain: national sovereignty.”

More:
http://www.economist.com/world/la/displaystory.cfm?story_id=9410681