Chavez says IOCs must transfer technology with contract

Venezuelan President Hugo Chavez said his country will stop doing business with international oil companies (IOCs) that fail to transfer technology as part of their contracts.

Jul 28th, 2008

Eric Watkins
Senior Correspondent

LOS ANGELES, July 28 -- Venezuelan President Hugo Chavez, renewing concerns about an old theme, said his country will stop doing business with international oil companies (IOCs) that fail to transfer technology as part of their contracts.

"The order I'm giving is the following: Any foreign company that doesn't transfer technology, well, their contracts will be canceled. We'll get others that want to be here," Chavez said on national television.

The issue of technology transfer is a sore one with the Venezuelan president as well as with IOCs themselves.

Last October ExxonMobil Corp. and ConocoPhillips, under pressure from the government, withdrew from Venezuela, leaving behind their right to produce oil as well as technology and infrastructure that could be used by their competitors.

Technology for advanced well drilling, upgrading oil quality, and prevention of accidents could fall into the hands of companies, such as state-owned Petroleos de Venezuela SA (PDVSA), that do not have the technical expertise to extract reserves with the same efficiency as the two US firms.

The future remains unclear as to the status and use of the left-behind technology, but it could prompt a legal challenge from the two companies.

Earlier in 2007, Chavez blamed former directors of PDVSA for allowing transnational companies to extract oil from the country without investing in new technology.

"The transnational companies did not uphold their agreements…. They extracted a billion barrels of oil without investing in technology to produce heavy crude," Chavez said in his weekly Alo Presidente talk show.

Chavez said the former PDVSA directors who signed agreements with transnational companies during the period between 1958 and Chavez's first election in 1998 should be taken to court.

"It was authorized robbery," Chavez said.

Contact Eric Watkins at hippalus@yahoo.com.

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