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Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (108719)	6/27/2007 4:07:05 AM
From: stockman_scott	Respond to of 361375

Exxon Mobil, Conoco pulling out of Venezuela ______________________________________________________________ From Dallas Morning News Staff and Wire Reports 11:41 PM CDT on Tuesday, June 26, 2007 CARACAS, Venezuela – Exxon Mobil Corp. and ConocoPhillips refused to sign deals Tuesday to keep pumping oil under tougher terms in Venezuela's Orinoco River basin, signaling their departure from one of the world's largest oil deposits. Analysts said the move, however, won't have a major effect on supplies or lead to higher prices at U.S. pumps because production by the two companies will shift to other producers who did agree to the pacts. Four major oil companies – U.S.-based Chevron Corp., BP PLC, France's Total SA and Norway's Statoil ASA – signed deals to accept minority shares in the oil projects under new terms set by President Hugo Chavez's government. "Exxon Mobil is disappointed that we have been unable to reach an agreement on the terms," the Irving-based company said in a statement. "However, we continue discussions with the Venezuelan government on a way forward." Officials said Exxon Mobil, the world's largest publicly traded oil company, will have no remaining oil interests in the South American country. It remains unclear how the companies will be compensated for their losses. The six companies invested more than $17 billion in the Orinoco projects and hold $4 billion in outstanding debts, but Petroleos de Venezuela SA, also known as PDVSA, would not be assuming those obligations, Oil Minister Rafael Ramirez said. "Each company is responsible before the banks for its commitments," he told reporters. The exiting energy companies have legal standing to get some of their investment back. "There really is an international dispute mechanism they can take advantage of that is a very real process that will move forward regardless of whether Venezuela wants to participate," said Jim Loftis, London-based chairman of the international disputes resolution practice group for Vinson & Elkins LLP. "It will produce a real reward that can be enforced." Often countries will have bilateral investment treaties that govern how foreign companies are treated in these kinds of cases, international law attorneys say. The U.S. doesn't have such a treaty with Venezuela, but many other nations do, and global energy companies may try to enforce the deals by having operations in those other countries. The U.S. State Department urged Venezuela to provide proper compensation. "The government of Venezuela, like any other government, has the right to make these kinds of decisions to change ownership rules," said State Department spokesman Tom Casey. "We want to see them meet their international commitments in terms of providing fair and just compensation." Mr. Ramirez said PDVSA is taking control of Exxon Mobil's and ConocoPhillips' remaining oil interests in the country, including Exxon Mobil's 50.1 percent stake in the La Ceiba block currently under development. ConocoPhillips was developing the Corocoro offshore oil field with Italy's Eni SpA, but PDVSA will take a 74 percent stake there with Eni holding the remainder. "We've seen this movie before," said energy economist James Williams of WTRG Economics, referring to other nations – such as Saudi Arabia – that initially partnered with U.S. energy companies only to take total control of the facilities later. "I think they'll try to go through arbitration and it will end very badly. I think we might see Exxon and others try to shop for a judge and try to get them in U.S. federal court." What could come into play for Venezuela is its interest in Citgo, which owns refineries and other assets in the U.S., Mr. Williams said. Litigation from U.S. energy companies could tie up Citgo indefinitely, which may help determine how Exxon Mobil and ConocoPhillips negotiate with the country. Houston-based ConocoPhillips was the most exposed: It was the largest private oil producer in the Orinoco, with its share of production equal to about 128,000 barrels a day. Venezuelan operations account for about 4 percent of the company's daily global oil and natural gas production. Shares of ConocoPhillips fell $2.24 to $75.80 Tuesday, while Exxon Mobil fell 55 cents to $81.82. Oil analysts don't expect any impact on world oil supplies or prices because they don't see any one company as having a major effect on Venezuela's overall production. "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 McGraw-Hill Cos. Tuesday's move is part of a broader nationalization effort by the Chavez government to assume greater control over strategic sectors of the economy. Aside from the oil industry, the government recently nationalized the country's top telecommunications and electricity companies. -Staff writer Eric Torbenson and The Associated Press contributed to this report.