PdVSA to Pay $56M in Compensation to Paria Gulf Partners

Venezuela has agreed to pay $56 million in compensation to Italy's ENI SpA (E), China's Sinopec and one local oil company operating in the offshore Paria Gulf ventures that were nationalized last year. Petroleos de Venezuela SA, or PdVSA, converted the Paria Gulf deals into state-controlled joint-venture companies and agreed to compensate the partners once the fields become commercially viable, according to copies of the unpublished joint-venture contracts reviewed by Dow Jones Newswires. Under the new agreements, PdVSA would pay ENI, China Petroleum & Chemical Corp. (SNP), known as Sinopec, and Ine Paria, a unit of Caracas-based engineering firm, Inelectra SA, a total of $56 million for their investments in three off-shore ventures, the documents show. PdVSA, ENI and Inelectra officials declined to comment for this article. Sinopec executives could not be reached for comment. The Paria Gulf developments as originally envisioned were designed as risk and profit sharing agreements between PdVSA and mostly foreign companies. The initial deals gave partners control over the exploration projects. Prior to the nationalizations, PdVSA retained the right for up to a 35% in each venture once production began. For President Hugo Chavez's administration, however, the deals fell far short of a controlling share for PdVSA. In 2007, Chavez ordered PdVSA to convert all heavy-oil upgrading projects in the Orinoco basin as well as the Paria Gulf ventures into 'mixed companies' with the state firmly in control.