Oil companies sign transition pacts with Venezuela

Seventeen oil companies operating in Venezuela on Friday signed accords in the presence of President Hugo Chavez agreeing to convert operating service agreements to state majority joint ventures.
The Chavez administration last year declared the 32 operating agreements illegal as part of efforts to wrest control of the oil industry from private companies.
"Here, 17 businesses - transitional and national - have signed the agreement," said Chavez. "We are going to work together."
He said the 32 agreements had been turned into 30 joint ventures or "mixed companies" with state oil giant PDVSA.
Companies that signed the transition accords included oil majors such as US based Chevron, and Spain's Repsol, as well as smaller companies like Harvest Natural Resources.
"As of today we are partners with PVDSA," said Nemesio Fernandez, vice president of Repsol.
Venezuela's national assembly, entirely controlled by Chavez allies, on Thursday unanimously approved a model contract outlining the basic framework for the new businesses.
The operating agreements, signed during the 1990s as part of a push for private investment in the oil sector, functioned as subcontracting agreements in which foreign and private companies pumped around 500,000 barrels per day (bpd) of oil on behalf of PDVSA.
But Chavez said the agreements were overly generous to private companies and did not allow the government to reap the benefits of oil profits.
For nearly a year, operators have been engaged in complicated negotiations with energy authorities to convert to the new businesses. Companies last year signed similar transition accords, but could not complete the migration because the legislature had not approved the model contract.
Chavez, a former paratrooper turned populist politician, has maintained widespread popularity by using oil revenues to finance a massive social development campaign to fight poverty in the world's No 5 oil exporter. His critics say he is squandering windfall oil profits on improvised social programs.