Home > Oil Industry Headlines: Week of February 15

Oil Industry Headlines: Week of February 15

517645_398705381.jpgCrude oil hit yet another high on Wednesday, touching $101.32 before settling at $100.74. Among the many circumstances affecting oil prices, one of the most unique for the week is the face-off between U.S.-based Exxon Mobil and Venezuela’s state-owned oil company PDVSA. The conflict began when PDVSA forced several private oil firms that had invested heavily in Orinico Basin oil projects to renegotiate their contracts or leave. Rather than give PDVSA a 60% share in the project as requested, Exxon Mobil chose to walk away from it’s multi-billion investment and seek compensation through arbitration. Exxon Mobil then demonstrated their lack of faith in PDVSA by obtaining orders from courts in the Netherlands and the U.S. to freeze about $12bn of PDVSA’s assets pending the outcome of arbitration. The U.S. backed Exxon Mobil’s move, infuriating Venezuela’s President Hugo Chavez. Chavez then made the following threats:
  1. To cut-off oil supplies to the U.S. (later recanted)
  2. To sue Exxon Mobil for $110M in alleged unpaid taxes
  3. To persuade OPEC to take action against the U.S.
  4. Again, to sue. This time for allegedly stealing about 500,000 barrels of crude from Venezuelan oil fields
Toward the weeks end, PDVSA made a slight attempt to back away from Chavez’s threats by asking Exxon Mobil to resume arbitration through the World Bank. It then settled with the other oil companies involved in the forced sale of interests in the Orinico Basin, making Exxon the sole complainant left in the case. As Mexico faces the rapid decline of its nations oil fields, President Felipe Calderon is attempting to gain support for privatizing state-owned oil company PEMEX. “The capacity of Mexico to produce petroleum is declining because our proven reserves are running out,” Calderon said last week. “They probaby will last nine more years.” Privatization would allow PEMEX to gain the cooperation of oil companies with advanced technologies that could dramatically improve oil exploration and development efforts. Mexico is the third-largest supplier of imported oil to the United States.

Published Thursday, February 21st, 2008 at 12:46 pm and filed under Industry News.