With crude prices soaring and oil reserves growing scarcer, the South American nation is still an attractive proposition for top petroleum operators even as the country’s socialist leader demands a bigger cut of the black gold revenues.

Chavez has accused Big Oil of robbing the nation’s resources, and last week seized two privately operated oil fields, but global oil giants like Chevron Corp., Royal Dutch Shell and Total are still seeking opportunities in Venezuela.

"A large majority of companies are willing to accept tighter terms," said Patrick Esteruelas, a consultant with the Eurasia Group in New York. "Venezuela has large untapped potential reserves and oil prices remain very high."

A group of 16 companies this month converted subcontracting deals to joint ventures giving state company PDVSA a majority stake even after the government imposed tough conditions – including retroactive tax demands and mandatory contract changes – that companies have often considered illegal.

Venezuela increased oil market jitters early this month by taking over fields operated by Italy’s Eni and France’s Total after the companies failed to reach an agreement to create joint ventures with PDVSA.

But both companies later said they would avoid a legal battle, and have signaled good will by agreeing to pay off a combined total of $126.6 million in back taxes to Venezuela.

Only Irving-based oil giant Exxon Mobil Corp. has resisted the Chavez government’s orders, selling its stake in a small oil field operation to avoid creating a new joint venture.

The populist Chavez, a former paratrooper elected president in 1998, has promised a revolution to end chronic poverty in Venezuela and has spent billions of dollars in windfall oil income on social programs for the country’s impoverished majority.
Although his fiery, lengthy speeches often attack the evils of capitalism, Chavez’s negotiations with oil companies have been practical and allowed him to cut deals with multinationals.

Still, analysts say Chavez’s ambitious social program has drained much-needed investment from the nation’s oil fields. PDVSA says it is producing 3.3 million barrels per day, but market-watchers including OPEC say production is only 2.6 million.

Brian Ellsworth