Venezuela Removes Exxon Mobil From Project
Posted on: Tuesday, 7 February 2006, 15:00 CST
CARACAS, Venezuela - Venezuela has removed Exxon Mobil Corp. from a multi-billion-dollar petrochemicals project amid wider differences with President Hugo Chavez's nationalist oil policies.
Exxon planned to team up with Pequiven, the petrochemicals division of state oil firm Petroleos de Venezuela SA, or PDVSA, to spend a combined $3 billion on a project to produce 1 million metric tons a year of ethylene and derivatives.
"On Jan. 20, Pequiven informed ExxonMobil Chemical that Pequiven would not be able to complete Jose Petrochemical Project feasibility study under the terms and conditions agreed in August 2004," Exxon said in a statement on Tuesday. "We have regretfully accepted Pequiven's decision and hope to continue our relationship."
Exxon has been resisting tax hikes and contract changes amid a so-called "re-nationalization" of Venezuela's oil industry. In 2004, Exxon was the only company to publicly speak against a royalty hike on extra-heavy oil production in the Orinoco river basin.
Oil companies, including ConocoPhillips, Total SA, Chevron Corp. and Statoil, agreed to the new terms without a struggle while Exxon threatened international arbitration.
Exxon was also alone in resisting contract changes for 32 privately run oil fields that will now be dominated by PDVSA under new joint-venture companies. Exxon sold its stake in one of the fields to avoid accepting the unfavorable terms.
These moves have put Exxon on PDVSA President Rafael Ramirez's black list.
"The doors are closed to that company here," said Ramirez in December after Exxon refused to alter the contract for a field it had a 25 percent stake in.
Exxon sold the stake to its partner in the field, Spanish Argentine oil major Repsol YPF.
Exxon, however, is moving forward with other Venezuela projects. The company delivered a development plan for the La Ceiba oil field to Venezuelan authorities in December. Exxon and Petro-Canada each hold a 50 percent stake in the field.
Shares of Exxon Mobil fell 96 cents to $61.01 in afternoon trading on the New York Stock Exchange.
Source: Associated Press/AP Online
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