Published January 13, 2015
Exxon Mobil Corp. (XOM) and ConocoPhillips (COP) refused to sign deals by a deadline Tuesday that would enable them to keep pumping oil under tougher terms in Venezuela, the nation's oil minister said.
But the government signed deals with four other major oil companies involved in oil ventures in the Orinoco River region — U.S.-based Chevron Corp. (CVX); Britain's BP PLC, France's Total SA and Norway's Statoil ASA.
Analysts said they did not think the refusal of the two companies to sign new deals would have a major impact on supplies from the region as others would likely step in.
An official at Houston-based ConocoPhillips, the largest private oil producer in the region, said earlier Tuesday that it would not sign by the deadline set by President Hugo Chavez's government.
Oil Minister Rafael Ramirez had warned that foreign oil companies that resist the new deals would be expelled from Venezuela.
In his speech at the signing ceremony, Ramirez said that by not agreeing with the government's new terms, "Exxon Mobil and ConocoPhillips end their participation in the businesses" of the Orinoco as well as other Venezuelan exploration activities.
He thanked the companies that agreed to the new terms, saying that with their signatures they are working toward a "secure future" in Venezuela. He also said the deals will bring greater benefit to Venezuelans and are in keeping with "the will of our people."
Petroleos de Venezuela SA, also known as PDVSA, said it was taking ownership of ConocoPhillip's 50.1 percent stake in the Petrozuata project, as well as the La Ceiba block currently under development near western Lake Maracaibo that is 50 percent owned by Exxon Mobil.
"On the basis of the negotiations conducted, the former strategic association Petrozuata and the La Ceiba ... block pass to the total control of PDVSA," the state-owned oil company's statement said.
PDVSA's stakes in the other four Orinoco joint ventures will rise to an average of 78 percent, from previous government stakes ranging from 30 percent to 49.9 percent, the state company said.
The major international companies have invested more than $17 billion in the Orinoco projects overall.
Chavez's government already took over operational control of Venezuela's last privately run oil fields on May 1 as part of its nationalization drive.
ConocoPhillips has been the most exposed: it is involved in two of the four projects and is the single largest private oil producer in the Orinoco, with its share of production equal to about 128,000 barrels a day.
ConocoPhillips is the third-largest U.S. oil company, and its Venezuelan projects account for about 4 percent of the company's daily global oil and natural gas production. Its other Venezuelan interests include developing the Corocoro offshore oil field and oil exploration activities in the Gulf of Paria and Plataforma Deltana.
Oil analysts don't expect ConocoPhillips' decision to have any impact on world oil supplies or prices. That's because energy traders don't see any one company's presence in Venezuela as having a big effect on overall production from the South American nation.
"It's not going to result in any less crude coming out of there," said Kevin Saville, managing editor for the Americas energy desk at Platts, the energy research arm of the McGraw-Hill Cos.
Oil production lost to ConocoPhillips or any other oil major will shift to someone else, said James Cordier, president of Liberty Trading Group in Tampa, Florida.
"Before everyone walks out, a deal will be struck and production there will continue," Cordier said.
Venezuela has claimed that foreign oil companies owe billions of dollars in back taxes related to oil projects.
ConocoPhillips shares fell $2.05, or 2,6 percent, to $75.99 in afternoon trading, while Exxon Mobil fell 20 cents to $82.17.