April 27, 2007
Not yet cornered
A little more digging has revealed that Hugo Chavez, Venezuela’s populist president, does not have the world’s international oil companies quite as cornered as he professes…at least not yet. This Dow Jones story gets it about right: Chevron, BP, Total, Statoil and even ExxonMobil, have all signed an agreement to renegotiate their Orinoco heavy oil contracts with PDVSA, Venezuela’s national oil company, and ConocoPhillips is likely to do so before the May 1 deadline. But what do these signatures actually mean? This is where things get a little fuzzy. On May 1, despite the flags, military and pomp, the main change will be the logo of the oil workers’ uniforms. Instead of Sincor, Total’s venture, the tags will read PDVSA. But whether Chavez will be able to extract the 60 per cent controlling stake he wants, and how he will compensate the partners, will be hacked out in tense negotiations over the next few months. Chavez may generally have gotten what he wants until now, but the oil companies have at least one trump card: they have the know-how to run the fields.
