Engineering News

Chavez warns petrochemical companies over contracts
Sun Jun 26, 2005 12:23 PM ET

CARACAS, Venezuela, June 26 (Reuters) - Venezuela's President Hugo Chavez has warned private companies working with a state-run petrochemical company that he will end their contracts unless they give priority to domestic demand before exports.

The left-wing president's tough line came as his government reviews foreign oil contracts to tighten control over the energy resources of world's No. 5 petroleum exporter and help finance projects for the poor.

State-run Pequiven is partnered at its Moron, El Tablazo and Jose complexes with businesses such as Japan's Mitsubishi Gas, U.S. company Koch Industries and Snamprogetti, a unit of Italian energy company Eni.

"I won't accept that production in Jose, Moron and El Tablazo is sent overseas without first supplying the needs of the country. No, that is the imperialist model," Chavez said late Saturday in El Tablazo in western Zulia state.

"I hope our partners ... Mitsubishi, Koch, Snamprogetti, understand, and if they don't understand, well, the contract ends," he said at an event to reorganize Pequiven.

Chavez, a former soldier elected in 1998 promising to fight poverty, often says energy contracts signed with private companies before he first won office are "robbing" Venezuela by giving foreign companies preferential terms.

At Pequiven, he pointed to fertilizer production from Jose, where he said most output was shipped overseas.

"I have given orders that they stop that right now, and if they want to sue us, then go ahead," he said.

During the event, Venezuela signed a deal with Brazil's Braskem to invest $250 million for propylene production at El Tablazo as part of a revamping of Pequiven.

Chavez said the government would increase output at Pequiven, which produces ammonia, plastics, urea and other derivatives, but on terms beneficial to Venezuela.

He has already increases royalties and taxes for foreign oil companies and ordered some contracts shifted to a new hydrocarbons law giving the state 51 percent control of joint energy ventures.

The blunt-speaking Venezuelan leader promotes his self-styled "new socialist" revolution as an alternative to U.S. trade and foreign policy and has sought closer ties with partners such as Cuba, Brazil, Argentina and Iran.

U.S. officials say he has become a threat to regional stability. Chavez rejects the charges, but accuses Washington of plotting to oust him.

U.S. companies Chevron, ConocoPhillips and Exxon Mobil are among those who invested billions of dollars in the 1990s in Venezuela. Exxon has said it was considering arbitration over the higher royalties.

"Some foreign companies are threatening, saying they will take us to court ... we are defending our rights," Chavez said. "Pay what you have to, and those who don't agree, take your things and get out of here."

Source: Reuters

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