US companies reject deal with Chavez

BBC:

Two major US companies have rejected a deal that would keep them working in Venezuela's most important oil field, according to state oil firm PDVSA.

The government is taking over majority control of operations in the Orinoco Belt, as it extends state control.

PDVSA said four firms - BP, Chevron, Total and Norway's Statoil - had signed deals to take minority stakes, but Exxon Mobil and ConocoPhillips had not.

President Hugo Chavez set Tuesday as a deadline for foreign firms to agree.

In May, PDVSA took over control of exploration projects in the Orinoco Belt, which had been among the last privately-run fields in the country.

It is the country's most important oil area, with massive potential.

There are proven reserves of at least 80 billion barrels, but there could be enough there to make Venezuela the world's biggest source of oil.

President Chavez demanded that private companies hand over majority control to the state as part of a nationalisation drive.

The six international firms working there had little choice, but there had been intense negotiation over compensation.

...
The main reason that business judgment would reject this deal is there is no reason to believe that Chavez will honor any deal that is entered into. What he wants is for them to take the development risk and if something is found he would confiscate the results of the search. His bad faith in such deals seems evident with his confiscation of the resources of previous explorations.

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