Oil Companies Give Venezuela Control

Four major oil companies on Wednesday agreed to cede control of Venezuela's last remaining privately run oil projects to President Hugo Chavez's government, but ConocoPhillips resisted, prompting warnings that its fields could be taken over outright.

Markets have waited to see if the companies, which pump and process heavy oil in the Orinoco River basin, would remain as minority partners after Chavez decreed last month that their fields be nationalized on May 1. The four projects are considered Venezuela's most lucrative.

Officials from Chevron, BP PLC, France's Total SA and Norway's Statoil ASA signed memorandums of understanding Wednesday agreeing to give state oil company Petroleos de Venezuela SA a majority stake in three of the projects. Exxon Mobil Corp. signed earlier in private, officials said.

"ConocoPhillips has not signed," Venezuelan Energy Minister Rafael Ramirez said at the ceremony.

Houston-based ConocoPhillips is the most exposed: it is involved in two of the four projects, Ameriven and Petrozuata, and has the single largest stake of any company -- a 50.1 percent interest in Petrozuata.

Ramirez said if ConocoPhillips does not sign by May 1, the state will take control of its two projects, but added that Venezuela remains open to dialogue.

"I think (ConocoPhillips) is willing" to sign eventually, Ramirez told reporters.

ConocoPhillips spokesman Charlie Rowton told The Associated Press that discussions were ongoing.

Wednesday's signing ceremony also included agreements giving the state control over some smaller projects outside of the Orinoco: Exxon Mobil's La Ceiba oil field and the Gulf of Paria East offshore oil field that Chinese company Sinopec plans to develop.

Ramirez said Italian oil company Eni SpA also did not sign, which raises questions about plans to develop the Corocoro offshore oil field, where it has partnered with ConocoPhillips. Eni had another oil field seized by Venezuela last year.

The companies in the Orinoco have until June 26 to negotiate terms of the takeover, including compensation, their new stakes and operational control for the projects, which they have run independently until now. The companies have more than $17 billion in investments and loans in the projects.

Chavez has said PDVSA will take a minimum 60 percent stake that he will send soldiers with government officials to take control of the projects on May 1.

"It's going to be a day of celebration," Ramirez said after the signing ceremony.

Ramirez said the agreements are key to moving toward a nationalized oil industry. Chavez's government has made clear that it still welcomes private investment in oil projects, and until now most oil companies have appeared willing to adjust to the new, tougher terms.

"Every company has to decide for itself," Ali Moshiri, head of Chevron's Latin American operations, said when asked if ConocoPhillips had informed Chevron of why it had yet to sign. ConocoPhillips and Chevron are partners in Ameriven, holding 40 percent and 30 percent stakes respectively. PDVSA has the remaining 30 percent.

The projects upgrade heavy, tar-like crude into more marketable oils and are considered Venezuela's most promising. As older fields elsewhere go into decline, development of the Orinoco is seen as key to Venezuela's future production.