CARACAS, Venezuela - Venezuela's moves to tighten terms on foreign oil companies operating in the Orinoco River basin may jeopardize investment and will likely cut into the companies' share of profits in lucrative heavy oil projects, analysts said Wednesday.
The tar-soaked basin's immense potential has kept the companies from pulling out, but President Hugo Chavez's government appears to be playing a bold gamble in an area where it needs Big Oil's expertise and investment, some analysts said.
Venezuela on Tuesday declared its plans to take a controlling stake in four heavy oil upgrading ventures in the oil-rich Orinoco belt by the end of the year. It simultaneously announced a newly approved income tax rate of 50 percent, up from 34 percent, effective in January.
For the six companies involved — ConocoPhillips, Chevron Corp., ExxonMobil Corp., Norway's Statoil ASA, France's Total SA and BP PLC — the changes mean shouldering a greater burden of the costs, while seeing a smaller share of revenues, said Patrick Esteruelas, an analyst at the New York-based Eurasia Group.
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CARACAS, Venezuela - Venezuela's moves to tighten terms on foreign oil companies operating in the Orinoco River basin may jeopardize investment and will likely cut into the companies' share of profits in lucrative heavy oil projects, analysts said Wednesday.
