Venezuelan authorities are saying that the country is not benefiting enough from the operating agreements signed in the 1990s with private oil companies. These companies have been burning Venezuelans...
Venezuela's Energy Minister Rafael Ramirez estimated that PDVSA has to buy crude oil produced by private companies under these operating agreements at an average cost of US$30 per barrel, when PDVSA produces itself at a cost of only US$4. Ramirez estimated that Venezuela will save $3 billion by scrapping the operating oil contracts.
Of course
And he's got the Russian's helping him arm...
Russia could help Venezuela make Kalashnikovs, AK-103s in Venezuela Russian Rosoboronexport Company director, Sergei Chemezov has confirmed that Venezuela plans to make Kalashnikovs (AK-103) setting off alarm bells in Washington. Last month Rosoboronexport and the Venezuelan government signed a contract for Russia to deliver 100,000 Kalashnikovs.
PDVSA to assume operations of foreign companies that do not comply...The (Caracas) Daily Journal reports that Petroleos de Venezuela (PDVSA), South America's largest oil company, has repeated that existing operating agreements with foreign oil companies are illegal and that PDVSA will assume the operations of any company that does not agree to be a minority partner in a joint venture with PDVSA and sign new transitory agreements ... nullifying their existing contracts ... before the end of the year.
“Under the guise of service agreements, true grants were illegally awarded ... as opposed to joint ventures ... which are in accord with the current Organic Law on Hydrocarbons," said PDVSA president Rafael Ramirez at a press conference. “All operating contracts will cease to exist on January 1.”
In addition, PDVSA announced that it was creating transitory committees to oversee 32 oil fields managed by private oil companies as part of a forced conversion of operating contracts to joint ventures. Ramirez said that PDVSA will hold at least three of the five seats on the committees being formed. The remaining two seats on each committee will be filled by representatives named by the companies presently holding the operating contracts.
"These committees will determine what are the required investments for next year, the required operating costs,'' Ramirez said. "We don't want any delays in operations or productions in these fields.'' Initial findings of the committees will be submitted on Nov. 30, Ramirez said.Creation of the committees puts extra pressure on a handful of companies ... including Chevron, BP, Royal Dutch Shell and Total ... to sign transitory agreements with PDVSA and commit themselves to converting their operating contracts to joint ventures. Of the 32 fields covered by the operating contracts, 22 have signed such agreements, said Ramirez.
Some of the companies are said to be balking in private and have floated the idea of seeking international arbitration for specific performance of their existing contracts. Although the contracts provide for disputes to be resolved through international arbitration, Ramirez has effectively precluded that option by announcing that Venezuela would not sit down to arbitration with the companies, as such a move is a violation of its sovereignty.The new juntas seem designed to force along the hold-outs.
"Companies that don't sign these transitory agreements won't have representatives on these juntas,'' said Ramirez, who also doubles as the country's energy minister. "And we will directly assume operations.''