Caracas, July 10, 2007 (venezuelanalysis.com)— Venezuela’s state oil company PDVSA announced that it took full control over all of the country’s oil production on Sunday, including two fields operated by ConocoPhillips and ExxonMobil that resisted the nationalization process.
Last January the government of President Chavez had announced that it would nationalize portions of foreign oil production in the Orinoco Oil Belt, where seven transnational oil companies had invested in four major extra heavy oil production projects. All of these were joint ventures with Venezuela’s national oil company PDVSA, which had a minority share. The nationalization process increased PDVSA’s control over the oil to a controlling majority stake of at least 60%.
PDVSA President and Minister of Energy and Petroleum, Rafael Ramirez, explained that for those companies that did not agree to giving PDVSA a majority stake in the joint ventures, these have between June 26 and August 26 to come to an agreement with PDVSA about how their investment would be compensated.
“In fact,” said Ramirez, “currently we are operating 100% of the participation that they [ExxonMobil and ConocoPhillips] had and what is missing is an economic agreement, according to which the equipment of the two companies are in a process of negotiation with PDVSA.
ConocoPhillips has already stated that it rejects PDVSA’s offer and wants to take up the matter in arbitration. ExxonMobil has indicated that it is still trying to find an agreement with PDVSA before August 26th.
With the departure of ConocoPhillips, which owned 50.1% of the Petrozuata joint venture, PDVSA will now own 100% of that company. With the departure of ExxonMobil from the Cerro Negro joint venture, PDVSA’s share will go from 41.6% to 83.4%.
Venezuela’s Orinoco Oil Belt, which holds the world’s largest reserves of extractable crude, currently produces 418,000 barrels of oil per day. It is estimated to hold 230 billion barrels of extra-heavy oil, most of which has not yet been officially certified.
Oil Production Stable
Ramirez also issued a statement about Venezuela’s oil production, which according to opposition oil analysts is declining precipitously, is actually holding steady at 3.07 million barrels per day. A recent report in the newspaper El Mundo had stated that the nationalization of oil drills had caused a drop in production, which Ramirez strongly denied.
Actually, a lowering of Venezuela’s OPEC quota has led to a reduction of 195,000 barrels per day (bpd), explained Ramirez, but the year’s average should be at around 3.2 million bpd.
PDVSA is gradually absorbing all of the employees who used to work for private companies, said Ramirez, so that last year 5,480 workers joined PDVSA and this year another 1,300 will do so.