'Get off my crude-rich turf'
Caracas
Venezuela had a blunt message this week for Exxon Mobil Corp, one of the world's most powerful oil companies: get off my crude-rich turf.
Venezuela is tightening its squeeze on the oil industry, telling oil companies to give the state a greater share of profits - or get out.
Oil Minister Rafael Ramirez on Wednesday said Exxon Mobil was one of the companies that would "prefer to leave ... rather than adjust" to recent policy changes.
"We said we don't want them to be here then," Ramirez told the state TV broadcaster Venezolana de Television, adding if "we need them, we'll call them".
Exxon Mobil indicated on Thursday it had no plans to pull out.
"Exxon Mobil de Venezuela continues to have a long-term perspective of its activities in Venezuela," it said in an e-mail to The Associated Press.
The flap helped push the price of oil above US$67 a barrel on the New York Mercantile Exchange on Thursday as the market reacted to the latest sign of tighter state-control of energy around the globe.
Venezuela is taking on "Big Oil" at a time when rising oil prices, political instability in the Mideast and Nigeria and new buyers in Asia have put the world's fifth-largest oil exporter in a winning position.
After snubbing Exxon Mobil, Ramirez said Venezuela has other eager partners, including state companies from Russia, Iran, China, India, as well as traditional oil companies.
Speaking to supporters about the nation's oil industry on Thursday, President Hugo Chavez said his leftist government was "recovering sovereignty in the management of our oil business".
"If you don't like it, get out"
Without specifically referring to Exxon Mobil, Chavez added, "Whoever doesn't like this business, then go somewhere else. They didn't like it? Go somewhere else."
The new climate in the oil market has given Venezuela the flexibility to diversify "away from Western investors and incorporate state-owned companies from allied countries ... more willing to abide by new, tighter terms," said Patrick Esteruelas, analyst at the Washington-based Eurasia Group.
The government has increasingly sought projects with state-controlled oil companies in friendly countries. Last year, Venezuela granted exclusive licensing rights to certify and quantify reserves in blocks in the Orinoco tar belt to seven companies, including China's CNPC, India's ONGC and Iran's Petropars. The only western oil major included was Spanish-Argentine company Repsol YPF.
The trend is driven by Chavez's distaste for corporate multinationals, which he accuses of looting his country's oil wealth over the years. He enjoys strong support for his efforts to take more industry profits for use in social programmes for the nation's poor.
Since taking office in 1999, his government has passed legislation requiring a majority government stake in all oil production projects, hiked taxes and royalties on oil companies, and begun to collect millions of dollars (euros) in what it claims are unpaid taxes from them.
New guidelines
On Thursday, Congress approved new guidelines to turn 32 privately run oil fields over to state-controlled joint ventures.
Among the terms faced by companies like Royal Dutch Shell plc and France's Total SA: a minimum 60% stake for the state oil company Petroleos de Venezuela SA (PDVSA) in each field, PDVSA controlling the boards of the new joint ventures and a jump in income tax rates from 34% to 50% and royalties from 16.6% to 33.3%. They will also see their potential drilling acreage slashed by almost two-thirds.
Experts say, however, that fears that Chavez, a close ally of Cuba's Fidel Castro, is seeking to drive out private investment are exaggerated because Venezuela needs the technological expertise of Western oil majors to develop its vast deposits in the Orinoco belt.
Few state oil companies have the expertise to upgrade the extra-heavy oil and tar-like bitumen found in the Orinoco into lighter, marketable oils.
Notably, Exxon Mobil continues to hold a 41.7% stake in the 120 000-barrel-day Cerro Negro heavy oil upgrading project in the Orinoco along with partners BP and PDVSA.
Venezuela had a blunt message this week for Exxon Mobil Corp, one of the world's most powerful oil companies: get off my crude-rich turf.
Venezuela is tightening its squeeze on the oil industry, telling oil companies to give the state a greater share of profits - or get out.
Oil Minister Rafael Ramirez on Wednesday said Exxon Mobil was one of the companies that would "prefer to leave ... rather than adjust" to recent policy changes.
"We said we don't want them to be here then," Ramirez told the state TV broadcaster Venezolana de Television, adding if "we need them, we'll call them".
Exxon Mobil indicated on Thursday it had no plans to pull out.
"Exxon Mobil de Venezuela continues to have a long-term perspective of its activities in Venezuela," it said in an e-mail to The Associated Press.
The flap helped push the price of oil above US$67 a barrel on the New York Mercantile Exchange on Thursday as the market reacted to the latest sign of tighter state-control of energy around the globe.
Venezuela is taking on "Big Oil" at a time when rising oil prices, political instability in the Mideast and Nigeria and new buyers in Asia have put the world's fifth-largest oil exporter in a winning position.
After snubbing Exxon Mobil, Ramirez said Venezuela has other eager partners, including state companies from Russia, Iran, China, India, as well as traditional oil companies.
Speaking to supporters about the nation's oil industry on Thursday, President Hugo Chavez said his leftist government was "recovering sovereignty in the management of our oil business".
"If you don't like it, get out"
Without specifically referring to Exxon Mobil, Chavez added, "Whoever doesn't like this business, then go somewhere else. They didn't like it? Go somewhere else."
The new climate in the oil market has given Venezuela the flexibility to diversify "away from Western investors and incorporate state-owned companies from allied countries ... more willing to abide by new, tighter terms," said Patrick Esteruelas, analyst at the Washington-based Eurasia Group.
The government has increasingly sought projects with state-controlled oil companies in friendly countries. Last year, Venezuela granted exclusive licensing rights to certify and quantify reserves in blocks in the Orinoco tar belt to seven companies, including China's CNPC, India's ONGC and Iran's Petropars. The only western oil major included was Spanish-Argentine company Repsol YPF.
The trend is driven by Chavez's distaste for corporate multinationals, which he accuses of looting his country's oil wealth over the years. He enjoys strong support for his efforts to take more industry profits for use in social programmes for the nation's poor.
Since taking office in 1999, his government has passed legislation requiring a majority government stake in all oil production projects, hiked taxes and royalties on oil companies, and begun to collect millions of dollars (euros) in what it claims are unpaid taxes from them.
New guidelines
On Thursday, Congress approved new guidelines to turn 32 privately run oil fields over to state-controlled joint ventures.
Among the terms faced by companies like Royal Dutch Shell plc and France's Total SA: a minimum 60% stake for the state oil company Petroleos de Venezuela SA (PDVSA) in each field, PDVSA controlling the boards of the new joint ventures and a jump in income tax rates from 34% to 50% and royalties from 16.6% to 33.3%. They will also see their potential drilling acreage slashed by almost two-thirds.
Experts say, however, that fears that Chavez, a close ally of Cuba's Fidel Castro, is seeking to drive out private investment are exaggerated because Venezuela needs the technological expertise of Western oil majors to develop its vast deposits in the Orinoco belt.
Few state oil companies have the expertise to upgrade the extra-heavy oil and tar-like bitumen found in the Orinoco into lighter, marketable oils.
Notably, Exxon Mobil continues to hold a 41.7% stake in the 120 000-barrel-day Cerro Negro heavy oil upgrading project in the Orinoco along with partners BP and PDVSA.
posted by Alice at
Friday, March 31, 2006
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