Venezuelan president Hugo Chavez has reportedly reclaimed the last of the region's privately-owned oil fields, severely disrupting ExxonMobil, Statoil, Chevron, ConocoPhillips, Total and BP's operations in the oil-rich Orinoco river basin.
According to the Times Online, the four crude oil development projects in the Orinoco Belt region, which can convert approximately 600,000 barrels of heavy crude into synthetic oil a day, are thought to be worth more than $30 billion.
Forbes has revealed that Mr Chavez reclaimed the basin as part of his attempts to nationalize Venezuela’s oil reserves. Mr Chavez had reportedly accused the western oil giants of damaging the region’s oil fields though improper drilling methods in their attempts to ensure profits.
Forbes has reported that the Venezuelan government’s seizure of the regions last privately-run oil field had been planned for a while but revealed that ExxonMobil, Statoil, Chevron, ConocoPhillips, Total and BP are still caught in negotiations that they hope will allow them to remain as minority shareholders of the basin.
Forbes reported that ExxonMobil, Statoil, Chevron and BP have already signed agreements saying that they consent to the government’s control, and that ConocoPhillips has also revealed its intention to cooperate.
Forbes cited Michael Lynch, an analyst at Strategic Energy and Economic Research, as stating his belief that all of the oil companies, except perhaps ExxonMobil, would stay operational in the region. He is reported to have said: They’re hoping…that as time passes Chavez will realize he needs them more than they need him.
While Venezuela’s state-owned Petroleos de Venezuela was already a partner in the four Orinoco projects, Forbes has reported that industry experts do not believe that the company is capable of refining the region’s crude oil without the investment of western companies. As a result, while the situation remains unresolved, oil production in the region is reportedly expected to drop.