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Foreign oil firms give control of projects to Venezuela
From the Associated Press
April 26, 2007

CARACAS, VENEZUELA — Four major oil companies Wednesday agreed to cede control of Venezuela's last remaining privately run oil projects to President Hugo Chavez's government, but ConocoPhillips resisted, prompting warnings that its fields could be taken over outright.

Markets have waited to see whether the companies, which process heavy oil in the Orinoco River basin, would remain as minority partners after Chavez decreed last month that their fields be nationalized May 1. The four projects are considered Venezuela's most lucrative.

Executives from Chevron Corp., Britain's BP, France's Total and Norway's Statoil signed memorandums of understanding agreeing to give state oil company Petroleos de Venezuela a majority stake in three of the projects. Exxon Mobil Corp. signed earlier in private, officials said.

"ConocoPhillips has not signed," Venezuelan Energy Minister Rafael Ramirez said at the signing ceremony.

Houston-based ConocoPhillips is the most exposed: It is involved in two of the four projects, Ameriven and Petrozuata, and has the single largest stake of any company, a 50.1% interest in Petrozuata.

Ramirez said if ConocoPhillips did not sign by Tuesday, the state would take control of its projects, but he added that Venezuela remained open to dialogue. Ramirez said he believed that ConocoPhillips would sign eventually.

ConocoPhillips spokesman Charlie Rowton said discussions were continuing.

Wednesday's signing ceremony also included agreements giving the state control over some smaller oil projects outside of the Orinoco: Exxon Mobil's La Ceiba field and the Gulf of Paria East offshore field that Chinese company Sinopec Corp. plans to develop.

The companies in the Orinoco have until June 26 to negotiate terms, including compensation, their new stakes and operational control for the projects, which they have run independently until now.

They have more than $17 billion in investments and loans in the projects.