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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (64020)	5/9/2006 1:02:51 PM
From: Dennis Roth	Respond to of 206338

Oil companies cut Venezuela investment during JV talks: document Last Update: 10:24 AM ET May 8, 2006 marketwatch.com CARACAS (MarketWatch) -- Oil companies that recently saw Venezuela scrap operating contracts halted investments leading up to the contract change, according to an industry document obtained by Dow Jones Newswires. During March, none of the companies operating 32 oil fields under a contract review carried out workover or drilling activities. Accumulated output at the 32 fields was 465,202 barrels a day in March, stable from February but down 7.8% from July, the document showed. According to the industry report, by March output had fallen from October at 19 of the fields. The largest drop was at Royal Dutch Shell PLC's (RDSA) Urdaneta field, where output fell to 43,400 b/d in March from 46,900 b/d in October. Venezuela finalized the contract talks at the end of March, which resulted in joint-venture companies in which state-run Petroleos de Venezuela S.A. (PVZ.YY), or PdVSA, holds at least a 60% stake. Oil majors such as Shell, Brazil's state-controlled oil company Petroleo Brasileiro SA (PBR) and Chevron Corp. (CVX) agreed to higher taxes and majority state control to maintain a presence in oil-rich Venezuela. But not all the companies caved in. Italy's ENI SpA (E) and France's Total SA (TOT) each had an oil field seized by PdVSA in April for failing to reach an agreement over the value of the fields. PdVSA has said it won't provide any compensation, opening the door to possible lawsuits. Other companies voluntarily returned an additional five fields, saying they wouldn't be profitable under the new business model. Oil Minister Rafael Ramirez has said output will rise rapidly now that PdVSA has majority control. Ramirez, who is also the president of PdVSA, has admitted that oil companies reduced their output during the negotiating process, which began in early 2005. The report showed that Shell and Harvest Natural Resources Inc. (HNR) have plans to renew drilling operations in mid-2006, indicating that some companies are willing to move forward under the new conditions. Venezuela's National Assembly on Thursday approved the final details for 21 new joint ventures that will produce 340,000 b/d at 25 fields. Some joint ventures will operate more than one field in an effort to reduce operating costs. This production doesn't include the two fields PdVSA seized and the five that were returned to the state oil company. PdVSA plans to incorporate those seven fields into its national production network. Private oil companies originally won operating contracts for the 32 fields during three bidding rounds in the 1990s. The Hugo Chavez government claims these contracts went against national law, allowing foreign oil companies to "rob" the nation for years under preferential tax terms. -Contact: 201-938-5400 ======== PdVSA can keep up income in face of falling production the short run by taking a bigger cut, but in the long run this will cost them needed investment, IMHO.