{news} Venezuela gives ExxonMobil ultimatum

[Justine McCabe]

Sent: Tuesday, December 20, 2005 1:18 PM
Subject: [GPUS-PAX] Venezuela gives ExxonMobil ultimatum


BBC NEWS | World | Americas | Venezuela gives Exxon ultimatum
The world's largest oil firm, ExxonMobil, is told to agree a joint venture 
with Venezuela or risk losing oil concessions.
http://news.bbc.co.uk/1/hi/world/americas/4544390.stm

Venezuela gives Exxon ultimatum

By Greg Morsbach
BBC News, Caracas

 Venezuela has become a key global oil producer


Venezuela has given the world's biggest oil company, ExxonMobil, until the 
end of this year to enter a joint venture with the state.

Failure to do so will almost certainly result in Exxon losing its oil field 
concessions in the country.

Venezuela's socialist government has now signed new agreements with almost 
all foreign petroleum companies.

After months of pressure from left- wing leader Hugo Chavez most foreign oil 
firms working there have caved in.

They have agreed to hand over a controlling stake of their oil interests to 
the Venezuelan state.

This means that Venezuela, which has the world's largest petroleum reserves, 
now calls the shots in what the foreign guests can and cannot do.

In addition, the companies which have signed the new contracts - such as 
Chevron, BP, Shell and Total - will in future be presented with much higher 
tax bills by the government.

Foreign unease

But Venezuela says it is only fair that the foreigners are made to pay up as 
they have got away lightly in the past.

Much of the oil revenue in Venezuela goes into social projects in shanty 
towns and poor rural areas.

But the US oil giant, ExxonMobil, is digging in its heels and is so far 
refusing to agree to the terms of the new deal.

Exxon risks losing Venezuelan operations if it fails to comply.

There is growing unease among foreign energy companies based Latin America 
that they may be forced to become junior partners by a string of left wing 
governments.

In the case of Bolivia and the apparent shift to the left there following 
elections on Sunday, it is possible that the new government will decide to 
follow Venezuela's example and renegotiate oil and gas contracts with 
foreign investors.




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