Venezuela Expands State Control Of Oil

Exxon Mobil Corp. and ConocoPhillips refused to sign deals Tuesday that would enable them to keep pumping oil under tougher terms in Venezuela.

Petroleos de Venezuela SA, or PDVSA, said that by Tuesday's deadline, it would sign with only four of the six major oil companies involved in lucrative oil ventures in the Orinoco River region — U.S.-based Chevron Corp.; Britain's BP PLC, France's Total SA and Norway's Statoil ASA.

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 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 to 49.9 percent, the state company said.

A ConocoPhillips company official said earlier Tuesday that the Houston-based oil major has refused to sign the deal ahead of the deadline set by President Hugo Chavez's government. "We will not sign a memorandum of understanding," said the company official, who insisted on anonymity before an official announcement.

ConocoPhillips shares fell $1.31, or 1.7 percent, to $76.73 in midday trading.

Venezuelan Oil Minister Rafael Ramirez has said ConocoPhillips would be expelled from the country if it continues to resist.

There were no places set up at the table for ConocoPhillips or Exxon Mobil at the signing ceremony with the major international companies, which 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.

Houston-based 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 affect 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.

Total had no immediate comment on Tuesday's deadline, company spokeswoman Patricia Marie said. Chevron also declined immediate comment. And Statoil spokeswoman Rannveig Stangeland said the company has "nothing new to communicate."

"We have a good dialogue with Venezuelan authorities," the Statoil spokeswoman said.

The deals to be signed Tuesday also set the terms of minority stakes in separate exploration projects outside the Orinoco that have yet to begin producing oil.

Venezuela has claimed that foreign oil companies owe billions of dollars in back taxes related to oil projects.