Conoco: Talks with Venezuela could take months
John Porretto Associated Press Business Writer
ConocoPhillips Chairman Jim Mulva said July 2 it could take several more months of negotiations with Venezuela to reach final compensatory terms for its multibillion-dollar investment in the country’s petroleum-rich Orinoco River basin.
ConocoPhillips, along with Exxon Mobil Corp., refused to sign deals in late June with the South American country to keep pumping oil under tougher terms posed by President Hugo Chavez’s government.
Houston-based ConocoPhillips has said it’s likely to write off the investments as a $4.5 billion impairment in the second quarter, and that it would reserve the right for international arbitration if talks fall apart.
Mulva said the company’s objective remains an “amicable solution on compensation,” though he acknowledged “it’s a pretty complex situation for ourselves.”
“We continue to conduct those discussions and negotiations and will continue to do so for the next several months,” he said in an interview with The Associated Press.
The Venezuelan government took majority control of the country’s last privately run oil projects May 1 and gave the companies until June 26 to decide whether they’d accept new terms as junior partners.
Four major oil companies — U.S.-based Chevron Corp., Britain’s BP PLC, France’s Total SA and Norway’s Statoil ASA — accepted; ConocoPhillips and ExxonMobil opted to walk away.
It remains unclear how any of the companies are being compensated for their losses. The six companies invested more than $17 billion in the Orinoco projects and hold some $4 billion in outstanding debts, but Petroleos de Venezuela SA, also known as PDVSA, would not be assuming those obligations, Venezuelan Oil Minister Rafael Ramirez has said.
In a filing July 3 with the U.S. Securities and Exchange Commission, ExxonMobil said it also continued to negotiate compensation with Venezuelan authorities. In the filing, ExxonMobil said the net impact of losing its Venezuelan interest could not be reasonably estimated, but it did not expect the resolution to have a “material effect” on the company’s operations or financial condition.
The Irving, Texas-based company said its investment amounted to about $750 million, or less than 1 percent of its worldwide property, plants and equipment as of March 31.
ConocoPhillips has said its Venezuelan operations accounted for about 4 percent of the company’s daily global oil and natural gas production.
Shares of ConocoPhillips rose $1.51 to close at $80.01 on July 2, while ExxonMobil was up 94 cents to close at $84.82.
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