Venezuela Seeks Resolution with Exxon, Conoco

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Venezuela Seeks Resolution with Exxon, Conoco

HOUSTON -- A month after ExxonMobil and ConocoPhillips quit their oil operations in Venezuela, the country is negotiating in good faith to compensate the oil companies for their recently nationalized assets, and hopes to avoid legal arbitration, Reuters reported.

Ambassador Bernardo Alvarez, Venezuela's ambassador to the United States, said during a goodwill trip to Texas that it was possible his country the two Texas-based oil giants would end up on good terms despite rancor over Venezuela's taking control of their operations in the Orinoco heavy oil belt.

"We have shown we are people of dialogue," Alvarez said. "Nobody wants to go to arbitration."

ExxonMobil and ConocoPhillips quit their oil operations in Venezuela last month, after socialist President Hugo Chavez decreed the giant oil Orinoco fields should be taken over. Four other oil majors -- Chevron Corp., Norway's Statoil, Britain's BP Plc and France's Total -- signed pacts with Venezuela allowing the country to take stakes of up to 83 percent in their Orinoco projects, according to Reuters.

ExxonMobil and ConocoPhillips can negotiate compensation from Venezuela for their lost operations or, if that fails, take legal action that could end up in international arbitration. ConocoPhillips has said it expected to take a second-quarter charge of $4.5 billion for its Venezuelan interests, but that their fair market value was more than that. ExxonMobil said it had invested about $750 million in the Orinoco belt.

Alvarez would not predict when the issue will be resolved, but held out hope for a happy resolution in which the companies and Venezuela continue doing business. "Maybe what you will see is a readjustment of the relationship," he said. "We need each other."

As Reuters reported, Venezuela is the No. 4 oil supplier to the U.S., but relations between the governments of Chavez and President George W. Bush are openly hostile.