HOUSTON—A drive by big oil-producing nations like Venezuela to renegotiate deals with international companies has already hurt global crude production, a trend that could worsen if foreign investment declines further.
In nations like Ecuador, Bolivia and major exporter Russia, soaring energy prices have emboldened governments to take a hard line on production contracts, many of which were struck in the 1990s when oil prices were below $20 a barrel.
That's a far cry from the highs near $80 a barrel set last year that left billions of dollars of export revenue on the table for leaders like firebrand Venezuela President Hugo Chavez, who relies heavily on the country's state-owned oil company to finance his left-wing social agenda.
Some of the world's top oil companies, including Exxon Mobil Corp., Chevron Corp., Conoco Phillips, Statoil and BP Plc, are facing a May 1 deadline to renegotiate deals in Venezuela's Orinoco oil region or have their multibillion-dollar projects seized.
In Russia, the Kremlin is also seeking ever-tighter control over its strategic oil and gas reserves where foreign investors like Exxon Mobil and Royal Dutch Shell already have only limited involvement.
"(Nationalism is) certainly having an impact on supply growth potential," said Ed Morse, chief energy economist at Lehman Brothers in New York. "In the case of Venezuela it has been either an unwillingness or an inability to attract capital to maintain current production, let alone to grow it."
Venezuela Oil Minister Rafael Ramirez has said the state would seize fields operated by foreign companies in the Orinoco if the May deadline is missed.
"The point is that after the host country says 'do as we say or we will kick you out,' the oil companies face the question of settling for half a loaf rather than their contractual full loaf," said Michael Goldberg, a senior partner at Baker Botts LLP and head of its international dispute resolution group.
The trend in Latin America could contribute to an overall decline in output from the Americas this year, countering earlier expectations of a rise, experts said.
For Ecuador, a go-it-alone strategy has led to output declines and a $2 billion bill to import fuel like gasoline as its own refineries are under-utilized, said Rene Ortiz, a former Ecuador oil industry official who now works at CERA.
Ecuador ousted U.S.-based Occidental Petroleum Corp. last year over accusations that the Los Angeles-based company sold part of a block without approval.
Some experts warn that the current path chosen by Chavez and others could have severe negative long-term consequences, not just for oil production, but for the countries themselves.
"If prices drop or even remain at the current level and they continue on this course, the host countries are not going to see a lot of new investment and expertise rushing into the countries," Goldberg said. Many producers are banking on the fact that oil prices will stay high, he added.
With high oil prices and a wide field of foreign competitors for projects from China and India, some see a lesser role for international companies.
"Many (national oil companies) don't need the help of big (international oil companies) any more," said Leonardo Maugeri, a senior vice president at Italian-based Eni S.p.A.
Rex Tillerson, head of Exxon Mobil, disagreed.
"The international oil company community ... has developed a considerable technical capability, considerable know-how," he said on the sidelines of the CERA energy conference in Houston.
"That's the role that we will continue to play in working hand in hand with national oil companies, ultimately to allow the country to realize the maximum value of its resources."
Feeds