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Venezuela seeks investments from Big Oil
(Agencies)
Updated: 2009-01-16 09:06 Chavez has talked often of partnerships with the state oil companies of Iran and Russia — but falling oil prices have left these countries with less cash to spend on distant projects. "There is no international financing in sight for Venezuela," said Heliodoro Quintero, Venezuela's former OPEC representative, who says the only option left is to seek help from the very companies Chavez spurned. PDVSA is in an extremely tight spot, with oil prices plummeting more than 70 percent since July. Venezuela's heavy crude is particularly expensive to upgrade to usable crude — not a problem when prices were sky-high. Now shrinking profit margins make it harder to finance production. Venezuela also needs new upgraders to make this extra-heavy crude refineable — which is why PDVSA is requiring bidders to help build three of the facilities. Oil Minister Rafael Ramirez each would cost $6 billion, to be completed by 2014. PDVSA says it has invited bids for minority stakes in projects to explore seven areas of the Orinoco delta, and that 19 companies, including Chevron Corp., Total SA, Royal Dutch Shell Plc and Petroleo Brasileiro SA, spent $2 million each for a "data package" of technical information about the deposits. But it remains unclear whether any have actually presented bids. Chavez's history of nationalizations and tax hikes is surely fresh on the oil executives' minds. "It's very hard to build a billion-dollar project on shifting legal sands," said Russell Dallen, head of Caracas capital markets at BBO Financial Services. The companies themselves aren't saying — "We don't comment on bids," Total spokesman Kevin Church in Paris said Thursday, in a typical statement. StatoilHydro ASA bought the data package, but it is too early to say whether it will bid, spokeswoman Mari Dotterud in Norway said. "We haven't come that far yet." The world's major oil companies may end up bidding on the Venezuelan projects in the end, simply because global supplies are dwindling, and much of the remaining reserves are locked up by governments from Iran to Mexico. But first, Chavez may have to find ways of reassuring them that he won't seize their investments again. "As a long-term project, companies are more concerned about legal insecurity than oil prices," said economist Asdrubal Oliveros in Caracas.
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