On Friday, Venezuela state oil firm Petroleos de Venezuela (PdVSA) completed a previously announced plan to acquire ConocoPhillips' (COP) stake in a natural gas joint venture project with Chevron Corp. (CVX). Today, Venezuela's President Hugo Chávez seems to be calling shots in Venezuela, if not global, oil and gas industry. ExxonMobil which tried to challenge him in courts is stuck in an impasse with PDVSA with cases yet to be ruled upon in courts in The Hague and New York. Will Chávez try to shut doors for American oil companies in Venezuela? How Venezuela's oil policy will impact the US?
In Friday's statement, PdVSA said it "only recognized audited real expenses realized during the exploratory phase," which it said has been the model used for compensations. PdVSA also didn't mention a dollar figure or any plan for compensation. So, this effectively ends ConocoPhillips arbitration seeking full compensation for the state takeover of other assets in the Orinoco river basin.
The PdVSA-COP deal suggests that US oil companies operating in Venezuela may not have much choice but to comply with Chávez's whims and fancies. Mr. Chávez is in no mood to relent on letting foreign oil companies (read US and European) acquire majority equity stakes and controlling interests in oil and gas fields in his country.
Declining exports to the US
Venezuela is one of the key trading partners of oil and plays a strategic role in United States oil security. With the proven crude oil reserves of 172.32 billion barrels and with the refinery capacity of 1.75 million barrels per day, Venezuela is one of the top ten oil producers in the world. In 2008, share of petroleum exports in Venezuelan GDP was 24.3%. In 2008, oil exports from Venezuela amounted to 426.7 million barrels which occupies 9% of total United States oil imports. From 1997 there has been a steady decline in Venezuelan oil exports to United States.
Between, 2003-2008 there has been a 13.4% decline in Venezuelan exports to United States. This decline according to Venezuelan oil minister is primarily because of oil slump world over or reduction in oil prices which particularly troubled Venezuelan Economy. Venezuelan government took a series of measures to offset the fall in oil prices which included a cut in budget by 6.7% and increase sales tax.
