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No compensation for oil firms in Venezuela

May 10, 2012

Venezuela’s oil minister warned yesterday that foreign oil firms might not be compensated when their operations in the OPEC affiliated nation’s vast Orinoco reserve oilfields are taken over by the government in coming months. This has followed Friday’s rhetoric by Venezuela’s president, Hugo Chavez, in which he had challenged oil companies to sue him. Rafael Ramirez – oil minister – told reporters on the sidelines of an energy summit on the Venezuelan resort island of Margarita: We are all talking. There are permanent conversations with all the partners. We are going to see if there’s compensation because in some cases there may not be compensation. Chevron Corp. (U.S.A.), Exxon Mobil (U.S.A.), Conoco Phillips (U.S.A.), Statoil (Norway), BP Plc (U.K.) and Total (France) stand to lose millions of dollars because of proposed nationalization of their investments in the reserve of tarry crude. Ramirez, however, said that most of the companies were willing to stay on after the government takes a majority stake in the four heavy crude upgrader projects that are valued at more than $30 billion and can produce 600,000 barrels per day. The companies are willing to overlook the uncalled for treatment meted out to them because Orinoco is one of the world’s largest reserves and high oil prices allow them to return profits. May 1, is the official date when Venezuela’s state oil company, PDVSA, takes over the operation of the projects. Government seeks to finalize the detailed joint venture’s makeup by June 26. Eulogio del Pino, state oil company’s official in charge, said that the documents formalizing the transfer of operations will be signed within days. He, however, added that the government was still mulling different options for compensating the companies, ranging from cash to payment in oil to exchanging assets. Conoco Phillips’ CEO, James Mulva, denied that the company had been threatened regarding compensation. He said that the discussions finalizing proposed takeover were ‘on’ and may well stretch beyond 1st of May. He said: The negotiations regarding the compensation and commercial terms going forward is going to go, certainly, beyond the first of May. It will take possibly weeks or months to conclude that. Hugo Chavez’s self-styled socialist revolution will get a shot in the arm if indeed he follows up on his ‘challenge,’ and successfully nationalizes the operations of foreign companies without further controversies.

News Of Economy

U.S. ordered energy firms and bank to leave Iran

April 17, 2012

Battle between US and Iran is not soothing down. US is trying to isolate the Islamic Republic over its atomic program as it urged to all European banks and energy firms to sum up their business with Iran. US sent a blunt message to their European supporting nation that reputations are at stake if they do so. US, has cleared its intention to thwart Iranian strife to develop nuclear expertise. United Nation has already implemented the sanction on Iran and now US is impeding other prosper nation to give any kind of financial advantage to Iran. If European bank implements U.S. urge then it will adversely affect the Iranian business because European banks are major financiers in Islamic nation oil refineries. After US displeasure over investment in Iran, all major banks and oil drillers are pulling their money out from the Iranian economy. French bank, Societe General has stop financing for a $5 billion project to develop part of Iran’s massive South Pars gas field. Oil giant Statoil is also protecting U.S. interests, and leaving its investment in the Azar oilfield. Other European big oil players are also bowing in front of American decision as Royal Dutch Shell, Eni and Total are renouncing its assets in Iran and latest political concerns forced companies to change their investment plans. The U.S. Treasury’s top anti-terrorism official Stuart Levey said The world’s top financial institutions and corporations are re-evaluating their business with Iran because they are worried about the risk and their reputations Iran has confirmed that under US pressure multinational companies are leaving their hefty profit and reluctant to invest in the country. Akbar Torkan, head of Iran’s Pars Oil and Gas Company, said No European bank is ready to prepare new financing for us. The U.S. is putting pressure on all European banks Amid US sanctions, Iran is fighting back with plans to set up an overseas investment fund in Bahrain or Dubai to help finance South Pars. Iran said that despite US’s despotic attitude, Iran have long queue of foreign investors, those who are keen to invent in its oil and gas reserves. On paper, the National Iranian Oil Company has contracts of $40 billion worth. Although UN and US have implemented financial sanctions over Iranian economy to thwart nation to get nuclear access yet it will be difficult to stop investors from lucrative Iranian oil field. Apart from it, US and Europe are fighting for the rising oil prices, which has already inundated many market leaders’ profits, that will touch new heights and in all phases US will be a biggest looser. Image: lazerbrody Via: Reuters