FORBES: Update 1: Shell Says Joint-Venture Talks With Vene: “Royal Dutch Shell PLC said Monday that it was open to negotiating with the Venezuelan government on a new arrangement for using oil fields where the company has been operating under contract.”: Posted 4 October 2005

Royal Dutch Shell PLC said Monday that it was open to negotiating with the Venezuelan government on a new arrangement for using oil fields where the company has been operating under contract.

Venezuelan President Hugo Chavez reiterated over the weekend that all contracts with foreign petroleum companies for pumping oil must be converted into joint ventures with Venezuela's state-controlled Petroleos de Venezuela S.A., or PDVSA.

The government intends to take as much as 80 percent stakes in the new arrangements, Oil Minister Rafael Ramirez has said.

"We had been speaking about a 51 percent to 49 percent split, but we're open to discussing any percentage," President of Shell Venezuela Sean Rooney told The Associated Press Monday. "It's all about creating a new business that works for both partners."

Venezuela has 32 operating agreements with 22 private oil companies. The government has said all of those must be converted by the end of the year into joint ventures with the state oil company.

Rooney did not say whether Shell expected to meet the year-end deadline, but said negotiations were moving ahead.

"We are fairly well-advanced. We are in the leading group of companies," working with the government, he said.

Shell's operating contract expires in 2013, while a new joint venture would have a 25-year term. That could ensure a longer period for more investments, Rooney added.

Hague-based Shell and Venezuela's tax agency have also been involved in a dispute over allegedly unpaid taxes. Last month, Venezuela's tax authorities asked a court for an injunction on the Anglo-Dutch group's assets worth US$130 million (euro109 million).

The company has challenged the claim, and Rooney said it was awaiting a final decision from Venezuela's Seniat tax agency.

"I'm hopeful the final decision ... will be something that is acceptable," he said.

Seniat's head, Jose Vielma Mora, has said that foreign oil companies with pending tax debts will not be able to convert their operating contracts into joint ventures.

Venezuela is the world's fifth largest oil exporter.

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