January 21, 2007 / 11:47 AM / 11 years ago

Statoil's Venezuela risks seen limited -analysts

OSLO, Jan 10 (Reuters) - Norwegian oil company Statoil (STL.OL) is likely to feel a marginal effect from Venezuela’s plan to tighten the state’s grip on industry unless President Hugo Chavez were to opt for full nationalisation, analysts said.

Statoil declined to comment on its situation in the petroleum-rich country after Chavez in a fiery speech this week said he would seek a “revolutionary enabling law” to gain power from Congress and push through measures in the pursuit of “Venezuelan socialism”.

“Unless they go to full nationalisation, which at this point we do not expect, this has marginal impact for Statoil,” said Lucas Herrmann, an oil analyst at Deutsche Bank in London.

Assuming that Venezuela increases its stakes in oil ventures to 51 percent but does not fully nationalise them, the value of Statoil’s assets could be diluted by about $300 million, or about 6,000 barrels of output per day, Herrmann said.

Statoil aims to produce about 1.9 million barrels of oil equivalent per day worldwide in 2007 after its planned merger with Norsk Hydro’s (NHY.OL) oil and gas business later this year.

Statoil spokeswoman Rannveig Stangeland said the group would not comment on Chavez’s speech or speculate on its implications.

“As always, we are in constant dialogue with Venezuelan authorities. There is no change,” she said.

Statoil has a 15 percent interest and has invested $734 million in Venezuela’s Sincor development, which involves producing heavy crude on land and then transporting and upgrading it to a light, low-sulphur crude on the coast.


Analysts said Chavez’s plans after he was re-elected in a landslide vote last month, pose increased risk for oil companies’ investments. Among other measures, he called for the nationalisation of utilities and telecoms companies.

    Chavez also called for the nationalisation of multibillion-dollar ventures in the Orinoco heavy oil belt, which includes the Sincor project, but oil companies so far say there has been no change in the government’s policy of seeking a majority share in each project.

    Since 2004, the Chavez government has aggressively pushed private investors in Venezuela’s oil industry, which pumps over 1 million barrels per day, to agree to pay higher taxes and give a majority stake in each field to state oil firm PDVSA.

    Statoil also operates offshore block 4 in Platforma Deltana, where it is carrying out a $200 million exploration programme.

    Analysts see the net present value of Statoil’s investment in Venezuela at between $1.9 billion and $2.4 billion, most of it in the Sincor project, in which France’s Total (TOTF.PA) has 47 percent.

    “(Sincor) is a very important project, not least because all of the investments have been made, and it is producing revenues,” First Securities oil analyst Martin Moelsaeter told Norwegian business daily Dagens Naeringsliv.

    Venezuela’s PDVSA now has 38 percent of Sincor, which can produce some 200,000 barrels of extra heavy oil per day, and is a non-paying partner in the offshore block during the exploration period, with a right to 35 percent once it is declared commercial.

    Shares in Statoil were up 0.33 percent at 153.50 crowns at 1235 GMT, while the DJ Stoxx oil and gas index .SXEP was off 0.5 percent.

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