Oil and Gas News

Taiwan to negotiate with Venezuela over oil exploration

Jul 17, 2007, 14:07 GMT

Taipei - Taiwan's state-run oil firm, the Chinese Petroleum Corp (CPC), will hold talks with Venezuela to defend CPC's oil exploration rights in the country, the company's president Chen Pao-lang said on Tuesday.

'We definitely cannot accept Venezuela's request to take over our two oil fields. We won't even if Venezuela offers higher prices because oil is more important than money,' Chen said in parliament.

CPC has hired attorneys to negotiate with representatives from Venezuela in Houston and if no progress is made 'we do not rule out seeking international arbitration,' Chen said.

Venezuela is nationalizing all foreign-owned oil fields and at least 16 foreign oil firms have agreed to change majority ownership to a joint venture with Venezuela's state oil firm Petroleos de Venezuela (PDVSA).

Taiwan's CPC has a 7 per cent stake each in two sites, Paria East Block and Paria West Block, which are vital to Taiwan's energy needs.

CPC won the right to explore Paria East Block in 2003 where test drilling for oil continues. Conoco Philipps of the US owns majority state in Paria East Block and CPC owns 7.5 per cent stake.

CPC was allowed to drill for oil in Paria West Block in 1998 which has just begun to produce oil. Conoco Philipps owns a majority stake in it, while CPC has a 10 per cent stake.

Besides Paria East and West blocks, Conoco Philipps also has stake in other oil fields in Venezuela.

Taiwan imports 99.7 per cent of all the oil it consumes. The crude comes from long-term oil suppliers as well as oil from CPC's overseas oil fields.

CPC imports 220 million barrels of oil each year, averaging 602,000 barrels per day.

Venezuela, the world's fifth-largest oil exporting nation, is only one of the countries where CPC is drilling for oil. Others include Chad, Ecuador, Indonesia and Australia.

Taiwan press said CPC's talks to defend its oil fields in Venezuela will be difficult because Taiwan does not have diplomatic ties with Venezuela and President Hugo Chavez is determined to nationalize all oil companies and oil fields to assert greater control over his country's economy.