Peter Howard Wertheim
RIO DE JANEIRO, Jan. 9 -- Thirty-two privately operated Venezuelan oil fields returned to state control with the start of the new year, the government said.
The deadline expired at midnight on Dec. 31, 2005, for all private companies with contracts to independently produce oil. The companies will now have to agree to joint ventures that will give Venezuela's state oil company, Petroleos de Venezuela SA (PDVSA), majority control.
The 32 operating agreements were signed during 1990-97 when Venezuela's petroleum industry, nationalized in 1976, was opened to private and foreign capital. The objective at the time—when the price of crude was below $10/bbl—was to increase production at low-priority oil fields that had been closed because of their location or states of depletion and which PDVSA had no plans to reactivate.
As oil prices have rebounded in recent years, Venezuelan President Hugo Chavez's government has sought to boost its control and share of profits. In 2001, it passed a hydrocarbons law that made the operating agreements illegal by requiring oil production to be carried out by companies that were majority owned by the government.
As of Jan. 1, Venezuela had successfully completed "the recovery" of the 32 fields, Venezuelan Oil Minister Rafael Ramirez said in a statement. The government had threatened to reclaim oil fields from companies that refused to sign transitional joint venture agreements, which will later be converted into permanent agreements with PDVSA.
Chevron Corp., BP PLC, Royal Dutch Shell PLC, and Petroleo Brasileiro SA (Petrobras) were among those that signed earlier. Repsol YPF SA was the last to sign after buying out ExxonMobil Corp.'s stake in the Quiamare-La Ceiba oil field. ExxonMobil had resisted the contract changes, which will slash the oil companies' shares of profits and control over operations.
The state could take as much as a 90% stake in the new ventures. The amount the private companies have invested in the fields will determine the amount of control they have, Ramirez has said. The 32 oil fields have been responsible for about 500,000 b/d of Venezuela's officially declared production of 3.2 million b/d of oil.