By Humberto Márquez
CARACAS, Jan 22 1996 (IPS)

Venezuela opened the tender of 10 large oil fields in a closed bid between 25 transnationals this week, and a consortium formed by Mobil, Veba and Nippon snapped up “La Ceiba,” the first concession.

Nine different groups equalled the initial offer for the deposit, but in the tie-breaker Venezuela received an unexpected bid of 104 million dollars from Mobil (US), Veba (German) and Nippon (Japan) which left their goggle-eyed rivals out of the picture.

This was a great start for the nation, as Venezuela hoped to this showcase would attract enough capital to revitalise its battered economy, following three years of economic crisis and only 200 million dollars of foreign investment in 1995.

“We hope to remain in Venezuela for many years,” said Ronald Wilson, vicepresident of Mobil’s Latin American division, in Caracas this week, where 500 executives from 74 transnationals made the city into the temporary oil capital of the world.

In a world thirsty for oil reserves, Venezuela offered concessions on 10 oil-fields which will provide between seven and 11 billion barrels of light and medium crude, requiring more than a billion dollars of investments per year over a ten-year period.

The “La Ceiba” field, the first to be tendered this Monday, stretches over 1,742 square kilometres, on the southeastern side of the Maracaibo lake, 600 kilometres west of Caracas, alongside other deposits holding between one and 2.6 billion barrels.

The companies mentioned above formed 11 consortiums to bid for La Ceiba and nine of them offered the State its fifty percent share of the profits – this percentage increases to 84 percent once tax is included.

The tie-breaker came when the Mobil-Veba-Nippon group offered a one off payment of 103,999,999 dollars, way over the second offer of 57,500,001 by the US Exxon and the Anglo-Dutch Shell.

Other offers of between five and 40 million dollars from groups led by Texaco, Marathon and Unocal (US), ELF and Total (France), Agip (Italy) and Repsol (Spain), were left way behind.

After paying the bond, the winning group (50 percent Mobil, 30 percent Veba and 20 percent Nippon) will invest 50 million dollars in surveying new oilfields with three exploratory wells in La Ceiba, said Wilson.

“Further investments will depend on this exploration and some of the conditions being changed,” he added. The group want to do their accounting in dollars, a free exchange rate and greater clarity on the details of how local taxes will be charged.

Altogether, Mobil could invest a billion dollars in Venezuela over the next ten years, said Wilson, but he did not indicate whether they would be bidding for the other nine oilfields on offer.

The opening of the tenders “has brought excellent news, which has left us pleasantly surprised,” said Energy Minister Erwin Arrieta, “Venezuela will enter into a new era of exploiting this business as a partner and not a shareholder.”

Luis Giusti, president of the State Venezuelan Petroleum (PDVSA), said that “today we have seen that Venezuela is an excellent prospect for foreign investment.”

In informal interviews, other PDVSA leaders said the remaining offers would undoubtedly be picked up quickly following the success with La Ceiba.

“Those who offered 20 percent State participation in the profits must be recalculating their offers not to appear riduculous,” said one of them.

Others, like Ronald Pantin, advisor to the PDVSA president, stressed that as all the oilfields are different and will yield different income profiles it was decided to “open up the valuations of the interested parties to market forces.”

Those who take on the concessions will take responsibility for the risks and costs of all exploration, and if they find petroleum in exploitable quantities they will be bound to form a company where a PDVSA affiliate will have up to 35 percent of the shares.

Then, after tax, the company will have to pay half the profits to the State, selling the petrol to the highest bidder.

The PDVSA estimated production would run at between 500,000 and 800,000 barrels of crude per day for the next 10 years, by which time Venezuela will reach potential production of five million barrels per day.

The current potential is three million barrels per day, though only 2.4 million are actually extracted, and the reserves stand at 65 billion barrels.

The offer of these new areas, with reserves of light and medium crude oil, represent the “fall of the last bastion” against private capital in the PDVSA monopoly, nationalised in 1976.

Over the past five years, the PDVSA had already put certain parts of the business into private hands, like the exploitation of marginal reserves, the development of gas projects and the extraction of extra-heavy crude for improvement.

The State, however, maintains control over the industry as a whole, including the areas given out to tender this week, to the point where the companies taking on the projects must adjust their output according to the Venezuelan commitments to the Organisation of Petroleum Exporting Countries (OPEC).

As a result, nationalist sectors announced a second appeal to be made over the next few days to partially annul the method of bidding, claiming that this implies handing over control of the business, passing disputes over to foreign tribunals and doing away with the right of the local councils to charge taxes.

When asked if Mobil was afraid of this complaint, Wilson said he would rather not comment on the matter, “because it is a problem for the Venezuelan justice system.”

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