Chavez and Big Oil gear up for struggle over Venezuela’s oil future

Forcing Big Oil to give up control of Venezuela’s most promising oil fields this week will be relatively easy for President Hugo Chavez, but he will face a more delicate challenge in getting the world’s top oil companies to stay and keep investing.

If Chavez can convince companies to stick around despite tougher terms, Venezuela will be on track to develop the planet’s largest known oil deposit, possibly to surpass Saudi Arabia as the nation with the most reserves.
Chavez needs the private oil companies’ deep pockets and expertise to upgrade the Orinoco’s tar-like crude into more marketable oils. While Chavez says state firms from China, India and elsewhere can step in, industry experts doubt they are qualified.

Amid the turmoil, new investment from the private companies has already dried up. If any leave, Chavez might be hard-pressed to persuade other big players to take over.

For the companies, pulling out of the Orinoco would be damaging.

They have invested more than US$17 billion (€13 billion) in the projects, now estimated to have grown in worth to some US$30 billion (€22 billion). Venezuela has indicated it is inclined the pay the lesser amount — with partial payment in oil, and some suspect, tax forgiveness.

International Herad Tribune