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Venezuela: Chevron agree to sign JV conversion agreement

19 Dec 2005

Chevron corporation will now soon sign a transition agreement to convert its Venezuela's present operating contracts into joint ventures with Venezuela's oil company PdVSA, sources at the Venezuela's energy ministry has told reporters. A spokeswoman for the US major oil company has said Chevron expected to sign a formal agreement, possibly today. "Chevron will officially accept to shift our operating services agreements for Boscan and LL652 project to joint ventures format as required by the new hydrocarbons law," she said, citing a statement by Chevron's Latin America president, Ali Moshiri. Chevron will now engage in negotiations to migrate Boscan and LL652 fields operations in to a joint venture with PdVSA, where the national company will have majority ownership of the new company. "We will negotiate terms and conditions with the Ministry of Petroleum. Chevron wants to continue investing in long-terms projects in Venezuela," the statement said. The present agreements replace the operating contracts under which the companies pumped crude independently. Under the new transitional agreements, relating to the 2001 hydrocarbons law, PdVSA could now have a controlling stake of up to 80% pct in any ventures between PdVSA and the private oil operators, depending on the negotiation joint agreements negotiations between the parties. Chevron will be the latest company among 15 companies including Shell, BP, Repsol, Petrobras, Teikoku, and CNPC, Vinccler oil, Vinccler Benton, Hocol, Inemaka, Suelopetrol, Tecnopetrol, Perenco, that have signed agreements relating to the new 2001 hydrocarbons law to move toward the joint ventures with PdVSA, accounting for 360,000 barrels worth of production Venezuela's president Chavez government has made a threat that the companies would have to leave the country if they did not agree to the changed contracts by December 31. Venezuela is one of the top five suppliers of oil to the US. "We will negotiate terms and conditions with the Ministry of Petroleum. Chevron wants to continue investing in long-terms projects in Venezuela," the statement said. Chevron's Boscan field pumps more than 100,000 barrels per day of crude, alone accounting for about a fifth of non-PDVSA oil output in Venezuela. There are total of 22 private or foreign state oil firms with 32 operating contracts, that currently put out a total of 550,000 barrels a day. France's Total, Italy's Eni and the US oil firm ExxonMobil are among seven other small firms that have not yet agreed to the new deals. ChevronTexaco began exploration activities in Venezuela in the 1920s; in 1946, the company discovered the Boscan Field. Since 1996, when the country reopened the oil industry to private investment after 21 years, the company has operated LL-652 Block and Boscan in western Venezuela, with combined production of 125,000 barrels per day. Source: Petroleum world

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