Oil Minister Calls on Exxon and Conoco to Leave Venezuela

By: Kiraz Janicke – Venezuelanalysis.com

Caracas , August 30, 2007

Rafael Ramirez, Venezuela's Energy Minister and president of the state owned oil company PDVSA, called on US oil companies ConocoPhillips and ExxonMobil to leave Venezuela. Ramirez issued the call as he submitted details of proposed contracts relating to the final transition of companies operating in the Orinoco oil belt into joint ventures with PDVSA during a session of the National Assembly’s Energy Commission yesterday.

“We are in negotiations with the companies that don't accept our laws, to finalize their exit from the country,” he said referring to Conoco and to Exxon.

While the US-owned Chevron Corp, the British-owned BP, the French oil company Total, and the Norwegian Statoil accepted the terms imposed by the Venezuelan government in May, which gave a 60% controlling share to PDVSA over all projects operating in the Orinoco oil belt, Conoco and Exxon pulled out.

The president of Venezuela Oil Corp (CVP) and member of the board of directors of PDVSA, Eulogio Del Pino said that compensation negotiations with Conoco and Exxon should be concluded in the next few weeks. However, there would be no compensation, Ramirez said, for Total and Statoil, which have since reduced their participation in Sincor, a joint project with the government.

“We were very clear last year, we are simply not interested in working with companies that don't accept our law, that don't accept our constitution.” he continued.

Ramirez also called for the new contracts, which could give PDVSA up to 80% share in some joint holdings, to be published once they are approved by the National Assembly so that the Venezuelan people could compare them with contracts signed by the previous governments of the Fourth Republic. “Never again will they sign contracts behind the back of our country,” he said.

State participation in the Orinoco oil belt, which produces some 500,000 barrels a day, has increased from 39% to 78% with the nationalizations in May. Total oil production in Venezuela is approximately 3.09 million barrels according to official figures from PDVSA, with nearly half being exported to the United States.

PDVSA has also moved to address a shortage of oil drills which sparked an “operational emergency” in July with the first of 13 oil drills from China arriving in October.

Ramirez confirmed that with the final transition of the companies into joint projects with PDVSA a total of 4,000 workers would be incorporated on the PDVSA. Uncertainty surrounding the incorporation of oil workers from a number of drilling rigs nationalized in May sparked an industrial dispute last month. Negotiations for the collective contract for oil workers are still continuing.

In relation to recent allegations of corruption in PDVSA, Ramirez said that “within a company as complex as PDVSA, that makes many types of transactions every day, there are cases that we are investigating, that we are processing,” and he continued, “it should be recalled that in our country PDVSA is subject to all the mechanisms of control of public administration.”

“We have an organization of General Comptrol within PDVSA, we have a structure and a commissioner within PDVSA and in that manner we are handling a number of cases of possible administrative deviations.

However, he said there were different levels of cases and that PDVSA was asking the National Assembly to investigate an incidence of corruption dating from 2005, which he said caused, “immense damage to the nation, and we have reliable proof of contracts harmful to the nation with massive discounts in the importation of oil through Citgo.”

Ramirez emphasized, “We have reiterated to the National Assembly our petition that the necessary procedures be opened to punish all these deviations.”

He added that the oil industry would collaborate for the clarification of these issues, precisely because PDVSA could not be a company of private interests, "There is no way that we either want to or can evade the mechanisms of public control.”