MercoPress. South Atlantic News Agency

Only Total and ENI out of new Venezuelan oil contracts

French oil company Total and Italy's ENI have refused to accept the new Venezuelan rules for extracting crude, which forces them to become minority partners of Venezuelan government owned oil company PDVSA.

Venezuela's Energy Minister and PDVSA President Rafael Ramirez explained the nature of the new "joint ventures" in accordance with the 2001 Hydrocarbons Bill approved by Congress last March 30.

According to the new legal framework, PDVSA will have majority control of joint ventures, which will be the only authorized to produce crude in Venezuela. So far 16 oil companies have signed "migration agreements" with PDVSA making the transition to the new joint ventures from the "operating agreements" signed in the last decade under a different legislation. The previous operating agreements allowed multinationals to pump up to half a million barrels per day. Venezuela produces over 3 million barrels per day.

"Total and ENI did not accept" the new joint venture scheme, Ramirez said, so therefore they are simply putting a "full stop to those operating contracts". He added that it is "no longer possible" for the French and Italian oil companies to become PDVSA partners, because the joint ventures timetable was up March 31. "We are now waiting a settlement with those companies, but the possibility of forming joint ventures has expired. We established various time tables, which were even for all companies. We can't make exceptions" stressed Mr. Ramirez.

He acknowledged that PDVSA might face "legal action" by the two European oil companies, since the terminated operating agreements provided for international arbitration. However he has hopes of reaching "agreements" with Total and ENI. "They are two state-run companies with which we are now going to a legal process. Hopefully we will reach an agreement with them in the end...they can take PDVSA to court overseas," Ramirez said.

Total and ENI have expressed interest in negotiating a settlement with PDVSA, the Caracas daily El Universal reported on Sunday, quoting unnamed oil industry sources.

Total operates the Jusepin field which produces 33,000 bpd and also pumps heavy crude along the Orinoco River in a strategic alliance with PDVSA and the Norwegian firm Statoil, as well as extracting natural gas from the Yucal Placer field.

ENI operates the Dacion field, with a production of 50,000 bpd.Also signing "agreements to migrate" to joint ventures were foreign corporations CGC, Tecpetrol and Perenco, and Venezuelan companies Suelopetrol, Vinccler, Inemaka and Open, according to government information

Venezuela is the world's fifth largest oil exporter and founding member of the Organization of Petroleum Exporting Countries (OPEC).