Oil Venezuela's lifeblood is also a political flashpoint

For the private oil companies, the main issues in the ongoing negotiations are the price they'll receive for surrendering control and the details of how the projects will be administered under the new contracts. The IEA says PDVSA may have to shell out $30 billion to buy out the foreign oil companies in what Conoco CEO James Mulva has labeled an "expropriation."

"How we're treated in that process is going to have a direct impact on our appetite going forward," Chevron CEO David O'Reilly told analysts earlier this month.

If the experience of U.S. companies in other nationalizations is any indicator, the oil companies likely will end up with a reasonably fair price. Big Oil's real fear is that the Chavez government will emphasize political loyalty over technical competence in staffing the restructured partnerships. Synchronizing the operations of the sophisticated equipment needed to turn Venezuela's viscous oil into something that can be sold in world markets is not a job for political hacks.

Still, the oil companies are likely to swallow their objections and remain in Venezuela, if only because there are few untapped fields the size of the Orinoco Belt left in the world.

"They are not going to leave," says Fadi Kabboul, minister counselor for petroleum affairs in the Venezuelan embassy in Washington. "They can't afford to."

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