CARACAS, 1 April 2006 — Venezuela had a blunt message last week for ExxonMobil, one of the world’s most powerful oil companies: Get off my crude-rich turf. Venezuela is tightening its squeeze on the oil industry, telling oil companies to give the state a greater share of profits — or get out.
Oil Minister Rafael Ramirez on Wednesday said ExxonMobil Corp. was one of the companies that would “prefer to leave ... rather than adjust” to recent policy changes. “We said we don’t want them to be here then,” Ramirez told the state TV broadcaster adding, if “we need them, we’ll call them.” ExxonMobil indicated Thursday it had no plans to pull out. “ExxonMobil de Venezuela continues to have a long-term perspective of its activities in Venezuela,” it said in an e-mail to The Associated Press.
The flap helped push the price of oil above $67 a barrel on the New York Mercantile Exchange on Thursday as the market reacted to the latest sign of tighter state-control of energy around the globe.
Venezuela is taking on Big Oil at a time when rising oil prices, political instability in the Mideast and Nigeria and new buyers in Asia have put the world’s fifth-largest oil exporter in a winning position.
After snubbing Exxon Mobil, Ramirez said Venezuela has other eager partners, including state companies from Russia, Iran, China, India, as well as traditional oil companies.
The new climate has given Venezuela the flexibility to diversify “away from Western investors and incorporate state-owned companies from allied countries ... more willing to abide by new, tighter terms,” said Patrick Esteruelas, analyst at the Washington-based Eurasia Group.
The government has increasingly sought projects with state-controlled oil companies in friendly countries.
Last year, Venezuela granted exclusive licensing rights to certify and quantify reserves in blocks in the Orinoco tar belt to seven companies, including China’s CNPC, India’s ONGC and Iran’s Petropars. The only western oil major included was Spanish-Argentine company Repsol YPF.
The trend is driven by President Hugo Chavez’s distaste for corporate multinationals, which he accuses of looting his country’s oil wealth over the years.
He enjoys strong support for his efforts to take more industry profits for use in social programs for the nation’s poor.
Since taking office in 1999, his government has passed legislation requiring a majority government stake in all oil production projects, hiked taxes and royalties on oil companies, and begun to collect millions of dollars in what it claims are unpaid taxes from them.
On Thursday, congress approved new guidelines to turn 32 privately run oil fields over to state-controlled joint ventures.
