Venezuelan Government Says ConocoPhillips will be Expelled

Ramirez, Venezuela’s Minister of Energy and Petroleum and President of the National Petroleum Corporation, told the media on the 3rd that if the US company ConocoPhillips continues to refuse Venezuela to take over control of its oil business in Venezuela, the company will be expelled.

According to the Venezuelan government’s nationalization plan, foreign-invested projects in the Orinoco heavy oil belt must be converted into joint venture projects controlled by Venezuela’s national oil company, and the Venezuelan party’s shareholding must not be less than 60%. Starting from May 1, Venezuela began to take over control of the Orinoco heavy oil belt project, but ConocoPhillips has not agreed to this move by the Venezuelan government.

Ramirez emphasized that if any foreign company does not accept Venezuela’s nationalization conditions, “then it will have no choice but to leave.” He said that Venezuela "provides space for foreign companies to stay", but if necessary, the Venezuelan government will fully nationalize the heavy oil belt projects.

According to Venezuela's requirements, the agreement on converting the foreign-controlled project in the Orinoco heavy oil belt into a joint venture project should be reached before the 26th of next month, including issues of compensation and shareholding ratio. ConocoPhillips said it was still negotiating with Venezuela on the agreement.

Ramirez also said that foreign oil companies have raised approximately US$4 billion in debt for the Orinoco development project. The repayment obligations of this part of the debt are the responsibility of each oil company and will not be borne by the Venezuelan government.

The Orinoco heavy oil belt covers an area of approximately 55,000 square kilometers. The Venezuelan government and oil experts estimate that the area contains approximately 235 billion barrels of heavy oil. Foreign companies currently involved in local oil development include BP (British Petroleum), ConocoPhillips, Exxon Mobil, Chevron, Total and Statoil.