Venezuela To Oil Firms; Accept Sovereignty Or LeaveMon Apr 25, 2005 12:06 PM ET
By Pascal Fletcher CARACAS, Venezuela, April 25 (Reuters) - Venezuela's government aims to reverse a
past opening to foreign oil investors it says hurt the nation, and it will not work with companies that do not accept its
energy sovereignty, Oil Minister Rafael Ramirez said Monday.
In separate newspaper and TV interviews, Ramirez outlined
the fiercely nationalistic vision which has led left-wing President Hugo Chavez to recently order contract changes and tax
hikes for foreign companies operating in Venezuela.
The message seems mostly directed at U.S. oil majors which were
the biggest participants in a wave of foreign investment in the world's No. 5 oil exporter in the 1990s, when previous governments
opened up the energy sector.
Chavez, a fierce critic of Washington, has ordered a review of these 1990s oil contracts
he says have "robbed" the nation of income he wants to use to finance national development. Venezuela remains a major oil
supplier to the United States.
"We're going to reverse this internationalization (of our oil sector) ... we're going
to reverse the opening," Ramirez said in an interview in the Caracas daily El Universal.
In a move that alarmed investors
and analysts, Venezuela this month unilaterally ordered changes of terms and sharp tax increases for 32 oil field operating
agreements involving companies from the U.S., Europe and Asia.
In October, Chavez hiked royalty rates for multibillion
dollar extra-heavy oil upgrading projects in the Orinoco Belt, which partner foreign firms with the state oil company PDVSA.
These
1990s agreements and associations involve oil majors like
U.S. Exxon Mobil (XOM.N:
Quote,
Profile,
Research),
ConocoPhillips (COP.N:
Quote,
Profile,
Research),
ChevronTexaco (CVX.N:
Quote,
Profile,
Research),
and French Total (TOTF.PA:
Quote,
Profile,
Research),
among others.
"What we've told the American companies is ... we want a healthy relation, but we have the
full right to exercise our sovereignty in military, economic and above all oil matters," Ramirez told state TV.
"We're
not ready to maintain a relation with any country -- even where there is a history of oil exchanges -- where we lose out,
a relation of a colonized country, of a country that surrenders its resources," he said.
Ramirez said Venezuela wanted
"full oil sovereignty" and added, "If the companies understand this, then we carry on working. If they don't, then we are
not interested in working with them."
BLOW TO INVESTMENT?
At least one oil major, Exxon Mobil, has started talks
with the government over the Orinoco belt royalties increase in October. Some oil industry sources say the company might seek
international arbitration but the firm has not confirmed this.
Analysts say the contract shifts and tax hikes could
wipe tens of millions of dollars off the investment portfolios of energy firms operating in Venezuela.
Foreign companies
pump around 1.1 million barrels per day (bpd) of crude in Venezuela, including around 600,000 bpd from the giant Orinoco synthetic
crude projects and around 500,000 bpd through the operating contracts.
Ramirez said 16 of the 32 operating contracts
the government had ordered changed over 6 months had recorded unacceptable losses. "They are an insult, an assault against
the patrimony of PDVSA and the nation," he told El Universal.
Some analysts say Venezuela's aggressive drive to tighten
control over its energy sector could scare off future investors and damage plans to ramp up national oil output to 5 million
bpd by 2009.
But Ramirez discounted this and said there was strong initial foreign interest to bid for new natural
gas acreage in western Venezuela.
The minister said Venezuela was producing 3.1 million bpd. Most experts estimate
its output closer to 2.7 million bpd.
© Reuters 2005 ©
Source:
Reuters
