November 11, 2007 at 5:51 pm #3879
Venezuela congress approved new 25 year contracts on Upgrader JV after President Chavez took controlling stakes in all four heavy-crude upgraders early this year as part of nationalization campaign. ExxonMobil & ConocoPhillips (also PetroCanada from oil field investment) declined to accept the terms and decided to leave Venezuela. Total, Statoil, and Chevron have accepted the terms, and elected to remain as minority partners. (See Bloomberg News Venezuela JV’s get Final OK @ http://www.rigzone.com/news/article.asp?a_id=52248 )
The Upgrader operations were renamed Sincor is now Petrocedeno Mixed Company (Total 30.3%, Statoil 9.7% & PdVSA 60%), Ameriven/Hamaca is now Petropair Mixed Company (Chevron 30%, PdVSA 70%) and Cerro Negro will be Petromonagas Mixed Company (PdVSA 83.33% & BP 7.67%), Petrozuata is soley run by PdVSA now. ConocoPhillips held 50.1% of Petrozuata & 40% in Ameriven upgraders, and ExxonMobil held % in Cerro Negro upgrader. Exxon has now filed for arbitration and Conoco is expected to follow suit Friday 11/9. PdVSA has said it is not looking for new partners to operate these fields but few in the oil industry believe PdVSA will be able to efficiently run either project by itself in the long run. (See DJ News PdVSA Won’t seek partners @
Other companies that were partners with PdVSA in Western Paria Gulf Corocorp oilfield (Eni), Posa field (China Sinopec), and La Ceiba area (Exxon & PetroCanada) were also screwed in same manner as upgraders with PdVSA taking majority stake via trumped up taxes & tariffs that were subtracted from what PdVSA owed for the
compensation in taking majority stakes.
The fact that both China SNP & Sinopec were on the list of companies screwed does not seem to detered China’s CNPC from doing a MOU for putting up $4 billion (PdVSA to put up $2) to take 500 MBD in Junn 8 block of Faja region and then grow it to 1 million BPD by 2011. (See Bloomberg News China to Invest Venezuela @ http://www.rigzone.com/news/article.asp?a_id=52660 )
There was note that China previously invested $1.6 billion in Venezuela – which is brave of Venezuela to bring up, since it was for the production of Orimulsion where the oil was promised at $1/BBL in the fuel mix that was to be a substitute for fuel oil in China power plants. PdVSA raised price to $17/Bbl and cancled one of future Orimulsion units and the field was added to current heavy oil production so PdVSA can continue make false claim that it is making 3 million BPD (industry estimates only 2.4 MMBPD on original upgrader production sites).
So the buyer (China) is aware of whom it is dealing with – but I doubt Chavez does because the Chinese are awesome traders and eventually get things back to even when the time is right and market balance swings in thier favor.
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