News
Diplomat Stresses Venezuelan Control
By Kristen Hays
The Houston Chronicle
July 12, 2007
Venezuela's oil industry wants foreign partners to help tap its vast resources, but they need not come knocking if they want to call the shots, the country's ambassador to the United States said in Houston Wednesday.
Ambassador Bernardo Alvarez Herrera said Venezuela is continuing compensation talks with major oil companies that walked away from their multibillion-dollar Venezuelan operations last month. They did so rather than agree to terms of relinquishing control in the face of President Hugo Chavez's nationalization of oil operations.
Those who stay — or come later — will do so with Venezuela's government-controlled oil company in charge, Alvarez told the Chronicle editorial board.
"We want partnerships with private companies, but with that rule," he said.
Later, during an appearance at a Greater Houston Partnership luncheon, Alvarez was asked what Chavez wants to hear from the new U.S. ambassador to Venezuela.
"We are ready to respect Venezuela," Alvarez replied.
Patrick Duddy, a senior State Department official, recently was named to succeed the outgoing ambassador to Venezuela, William Brownfield.
Alvarez is spending several days in Texas on a visit he said has focused more on making community contacts than on the energy business, though he conceded that it's "impossible to have a completely non-oil visit to Texas."
Alvarez said he has not encountered hostility from Americans despite Washington's chilly relations with Chavez, a socialist who once likened President Bush to the devil.
"At least they know who Chavez is," he said during the meeting with the Chronicle.
Alvarez said he has found Americans open to discuss ions about differences and common interests involving the United States and the South American nation.
In May, Venezuela's state-run oil company Petróleos de Venezuela, or PDVSA, took over operations of major oil projects that had been run by Houston-based ConocoPhillips, Irving-based Exxon Mobil, San Ramon, Calif.-based Chevron and Paris-based Total. Most of the projects are in Venezuela's oil-rich Orinoco River basin, but ConocoPhillips also had an offshore project slated to begin producing next year.
PDVSA took over after Chavez issued a decree mandating the turnover.
Last month, ConocoPhillips and Exxon Mobil refused to accept new working terms for their Venezuelan operations and walked away. PDVSA absorbed their stakes, and the companies are now negotiating compensation for what they gave up.
Chevron and Total agreed to stay on as PDVSA's minority partners. London-based BP and Norway's Statoil, which already were minority partners, also agreed to stay.
After the Orinoco takeover
Analysts have valued the combined projects PDVSA took over at $25 billion to $30 billion. ConocoPhillips has announced plans to write off the entire $4.5 billion value of its Venezuelan assets in its second quarter results, but Exxon Mobil hasn't revealed its plans.
Spokesmen for the companies on Wednesday couldn't be reached or declined comment on Alvarez's statements or ongoing compensation talks.
Alvarez said in the meeting with the Chronicle that he isn't worried that the takeovers will chill future investment or participation from foreign companies.
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NOTE: The Venezuela Information Office is dedicated to informing the American
public about contemporary Venezuela, and receives its funding from the
government of Venezuela. More information is available from the FARA office
of the Department of Justice in Washington DC.
Venezuela Information Office
733 15th Street NW, Suite 932
Washington, DC 20005
tel: (202) 347-8081
fax: (202) 347-8091
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