April 14 (Bloomberg) -- Venezuela, the largest oil producer in South America, plans to force ChevronTexaco Corp., ConocoPhillips and other companies to convert contracts covering 32 fields into joint ventures with the state oil company so the country can earn more from petroleum sales.

Petroleos de Venezuela SA would hold a 51 percent stake in the ventures under the plan, Rafael Ramirez, the country's energy and oil minister, said at a press conference today in Caracas. The operating companies, mostly foreign owned, now hold oil- production contracts in which they're paid a per-barrel fee.

Venezuela, the world's fifth-largest oil exporter, wants the companies to pay more taxes and have their payments for oil produced from the fields capped, Ramirez said. Companies have six months to complete conversions, he said. Oil prices have more than doubled over the past three years.

``With oil prices so high, they think they can change the contracts without any problems,'' Jose Toro Hardy, an independent oil analyst and former Petroleos de Venezuela board director who oversaw the contracts, said in an interview today. ``The basis of these contracts were approved by the National Assembly.''

Paying Too Little

Venezuela's decision is the second since October that changes existing contracts with` oil companies. In October, President Hugo Chavez unilaterally raised the royalties on shareholders in four heavy-oil joint ventures, saying companies were paying too little.

``No contract is above the law,'' Ramirez said. Current contracts are detrimental to the government and Petroleos de Venezuela, he said. ``We are the owners of the resources in our house.''

Petroleos de Venezuela lost $260 million last year on 16 of the 32 operating agreements with private oil companies, Ramirez said. Most of the oil companies also evaded paying taxes on their operations, he said.

Ramirez said that no contracts would be revoked and that Petroleos de Venezuela would try to reach agreements with all the current holders. The contracts contain clauses stipulating arbitration in the event of differences.

``We have other companies who are interested in these fields,'' Ramirez said. ``However, we want to continue with the current operators.''

ExxonMobil de Venezuela spokesman Richard Bailey and Chevron Texaco spokeswoman Monica Davila declined comment. Shell Venezuela spokeswoman Bettina Steinhold and Statoil Venezuela spokeswoman Susana Brugada didn't return phone calls seeking comment.

Mature Fields

Petroleos de Venezuela granted the fields to international companies in the 1990s in three bidding rounds. The fields currently account for about 565,000 barrels of the country's 2.6 million barrels of daily output, Venezuelan Hydrocarbons Association President Luis Grisanti said earlier this week.

``These fields were mature oil fields, marginal fields, where Petroleos de Venezuela had no plans to invest,'' Toro Hardy said. ``Given that, the decision was taken to offer them to private operators.''

Contracts run up to 20 years, Petroleos de Venezuela officials said earlier.

Venezuela's decision to pressure companies to convert their operations comes as the country is seeking up to $10 billion in investment from foreign companies through 2009 to about double production capacity to 5 million barrels a day.

Auction Planned

The decision also comes four months before a planned auction of six offshore blocks in August. Venezuela is relying on international companies to explore and develop the fields, partially to alleviate a shortage of natural gas in the western part of the country.

``I am surprised that they are making this kind of announcement just prior to a bidding round,'' said David Voght, managing director of energy consultant IPD Latin America, which has offices in Caracas and Mexico City. ``It's better for the government to be clear in its energy policy.''

Creation of joint ventures would put the operating contracts in line with the country's hydrocarbons law, which was passed in 2001, Ramirez said. The law stipulates that Petroleos de Venezuela have a 51 percent stake in any joint venture.

Chavez said yesterday that many oil agreements signed before he took office in 1999 favored international companies at the expense of Venezuela.

The decision to change the contracts must be seen in the perspective of the government's other economic policies, which are aimed at short-term gains of revenue to finance burgeoning government expenditures, said Toro Hardy.

``This is a very short-sighted policy,'' he said. ``They are just trying to get revenue at any cost to cover spending.''

To contact the reporters on this story: Peter Wilson in Caracas at pewilson@bloomberg.net; Alex Kennedy in Caracas at Akennedy1@bloomberg.net.

Last Updated: April 14, 2005 15:34 EDT