THE WALL STREET JOURNAL: Shell Seeking Higher 2005 Capital Budget From PdVSA: “Royal Dutch/Shell is in talks with Petroleos de Venezuela S.A. after the Venezuelan national oil company proposed a capital budget that is smaller than what the Anglo-Dutch oil giant wants…” (ShellNews.net) Posted 25 Jan 05
By JOHN M. BIERS
Of DOW JONES NEWSWIRES
HOUSTON -- Royal Dutch/Shell (RD,SC) is in talks with Petroleos de Venezuela S.A. (PVZ.YY) after the Venezuelan national oil company proposed a capital budget that is smaller than what the Anglo-Dutch oil giant wants, a Shell executive said Monday.
"It's lower than what we would like," Shell executive Sean Rooney said of the PdVSA number.
Rooney, who will become president of Shell 's Venezuela division on March 1, said the difference between the two companies isn't huge. Shell received the PdVSA notice earlier this month after submitting the 2005 budget last year.
"I interpret it to be part of the normal process" of negotiations, Rooney said on the sidelines of an energy conference.
In recent weeks, ConocoPhillips (COP) and the much-smaller Harvest Natural Resources (HNR) have hit roadblocks in advancing drilling programs.
Venezuela wants to increase its oil production. At the same time, PdVSA has also been vocal about the need to redefine the terms of deals involving foreign companies.
Shell produces 50,000 barrels of oil a day in the Lake Maracaibo region. The budget difference in question is a fraction of the tens of millions of dollars Shell spends each year in Maracaibo, Rooney said.
Rooney, who previously served as head of commercial for Shell International in Holland, said Shell could probably double its Maracaibo output with the proper investment.
"There's a lot of opportunity in Venezuela for us," Rooney said. "I'm going down there with instructions to try to make the business larger."
-By John M. Biers, Dow Jones Newswires; 713-547-9214; firstname.lastname@example.org