AP
Venezuela Says Foreign Oil Deals on Hold
Thursday June 2, 7:01 pm ET
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"We will work to end the illegal situations that exist (with Sincor) so we can firmly move ahead with any new associations," such as the Sincor II project, Mommer told reporters.
France's Total and Norway's Statoil are partners with the state-run oil company Petroleos de Venezuela, or PDVSA, in the Sincor heavy crude upgrading plant that produces roughly 200,000 barrels of oil a day. The companies are negotiating a second phase of the project -- named Sincor II.
Oil Minister Rafael Ramirez said foreign companies operating the Sincor project in eastern Venezuela had been producing over the legal limit and would have to pay as much as US$1 billion in unpaid royalty taxes. Mommer said those tax-related issues must be resolves before any new deals are signed.
Sincor II is expected to take five or six years to reach full operating level and would add another 350,000 barrels of oil a day to Sincor's current production capacity.
Last year, President Hugo Chavez raised the royalty payments required of foreign oil companies operating in the country's so-called Orinoco to 16.6 percent from 1 percent.
Chavez, a self-declared socialist, nationalist and "revolutionary," has used windfall oil gains over the past year to fund social programs popular with this South American nation's poor majority -- his main constituency.
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