Venezuela to Revoke Contracts of Underperforming Oil Firms

Partner oil firms that continue to underperform in terms of oil production might end up having their contracts revoked by Venezuela. Rafael Ramirez, the country’s oil minister issued this statement last week.

The Venezuelan government has formally notified its partner firms to step up oil production since 2010.  This is in line with the government’s grand design for oil firms to further invest in oil exploration in Venezuela and, eventually, boost oil output in the years ahead.

The oil minister stated that he has pinpointed about 10 firms who have underperformed throughout the past few years.  Almost half of this number might eventually get axed. He assured that he would make another attempt at pressing these firms to answer the government’s demand.  In the end, however, he still issued a warning to oil firms indicating that the issue will be presented to the country’s National Assembly if they remain below target.

When asked to identify the “precarious” four, he refused to give the details, but disclosed that these are small-scale operators whose individual oil output amount to 30 barrels per day or less, each.

According to Ramirez, the government has given ample time for these firms to rev up their production, but time is running out. Nonetheless, he encourages these companies to discuss the matter with his group as soon as possible.

He mentioned too that Venezuela’s bigger oil partners, the likes of China National Petroleum Corporation and Chevron Corporation, have acted in accordance with Venezuela’s appeal.  He says it’s time for the other partners to respond accordingly.

Chevron aims to further expand its investments in Venezuela and has been continually holding talks with the country’s top officials to bring production in Carabobo 3 up to full commercial scale. Carabobo is one among the 23 states of Venezuela located in the northern part of the country.

Meanwhile, oil companies which strongly opposed the late Hugo Chavez’s unreasonable contract adjustments prefer to put off plans to increase oil investments in the country, choosing instead to test if the current head of state will prove to be more diplomatic than his predecessor.