Exxon Mobil Corp. and ConocoPhillips have decided the profits are not worth the risk of staying in Venezuela and are writing off multibillion-dollar investments in the South American country.
But other major oil companies have accepted the increasingly tough terms posed by President Hugo Chavez's government because they face few appealing alternatives elsewhere. Terms are even tighter in Russia; they're barred from the Middle East, and Africa comes with its own troubles of violence and instability.
"The risks are clearly there and growing in Venezuela," said Patrick Esteruelas, an analyst at the New York-based Eurasia Group. "But when compared to other nations, there are still sizable and substantial opportunities."
Under Chavez, Venezuela first raised royalty and tax rates, then later assumed majority control of all oil projects as part of a larger nationalization drive of "strategic" economic sectors. Chavez says those policies are ensuring that oil benefits Venezuelans instead of foreign corporations and governments.
Rising energy prices and Venezuela's huge oil deposits have strengthened his hand: The country's reserves are the largest in the Western Hemisphere and may eventually prove bigger than Saudi Arabia's if it continues certifying heavy oil deposits in the Orinoco River region.
Chevron Corp., Britain's BP, France's Total SA, and Norway's Statoil ASA - unwilling to forgo that opportunity - agreed Tuesday to stay on as minority partners in new joint ventures controlled by state-run Petroleos de Venezuela SA, or PDVSA.
But Exxon Mobil and ConocoPhillips broke ranks, rejecting the terms, effectively writing off their investments in the Orinoco and any future chance at tapping its potential. It remains unclear how the companies will be compensated.
Petrocanada also decided to get rid of its interests in Venezuela, passing its 50 percent stake in the western La Ceiba oil field to PDVSA. The block was not yet producing oil.
By law, private companies can now take as much as a 49.9 stake in oil production projects in Venezuela, and they face flat income tax and royalty rates of 50 percent and 33.3 percent, respectively.
"Some people think ultimately what the Venezuelans would like is complete 100 percent ownership of those assets. I don't agree," said Derek Butter, an analyst with Wood Mackenzie in Edinburgh, Scotland. "I think they'd be happy as long as they have a majority stake."
In contrast, most of Venezuela's fellow members in the Organization of Petroleum Exporting Countries block private investment in their oil sector entirely, as does Latin America's other leading oil exporter, Mexico.
Africa remains open but hardly welcoming or stable for the private oil majors. Militant attacks have trimmed about one-quarter of average daily production in Nigeria, Africa's biggest crude exporter, while weak governments are in a dubious position to offer the long-term guarantees sought by the oil industry.
Venezuela and Russia share some similarities: Nationalist administrations in both countries have revisited contracts signed in the 1990s when sweeter terms were on offer for those willing to take on high-risk projects amid low energy prices. They have also slapped back taxes on private companies.
"Venezuela has certainly not been alone in tightening terms," said Esteruelas. But he added they remain "looser or more attractive" than many countries, including Russia, where the government has been more aggressive and companies have had little or no recourse to contest its actions.
Exxon Mobil and ConocoPhillips' exit, however, poses a challenge for Chavez, whose government is highly dependent on oil revenues.
"Exxon Mobil and ConocoPhillips stepping away and being willing to write off billions of dollars - that's a big warning message that Venezuela can't count anymore on new investment," said Leo Drollas, chief economist at the London-based Center for Global Energy Studies.
While much remains unclear about how the new joint ventures will operate, some of Venezuela's goals are known. One is increasing productivity at the Orinoco projects, which will require money and expertise - both in short supply at Venezuela's state oil company.
Chavez has said national oil companies from friendly allies are more than willing to step in, but analysts including Esteruelas express doubts about both their capacity and willingness to take over such complex refineries.
AP Business Writer John Porretto in Houston contributed to this report.