S&P: Venezuela unaffected

Standard & Poor's said that in spite of the increasing political risk in Venezuela following the reelection of President Hugo Chavez, it does not foresee any rating action on major foreign companies operating there.

Nevertheless, foreign oil and gas companies are experiencing increased risks, including nationalization, the agency said in a report published titled "Ongoing Political Risk In Venezuela Still Poses Challenges For Foreign Oil And Gas Companies."

"The biggest risk for foreign oil and gas companies in Venezuela has become straightforward expropriation," noted S&P credit analyst Luciano Gremone.

Six foreign oil companies with producing interests in Venezuela's Orinoco Belt were negotiating to provide Petroleos de Venezuela SA, the country's national oil company, with a majority interest in four upstream regional projects, the report stated.

"However, the government said that Venezuela is ceasing negotiations and would impose a takeover of the projects or assume majority control after passing a new law," Gremone added in the report.

Another issue is that Petroleos de Venezuela is currently making a portion of its payments to operators in local currency based on a theoretical cost structure in local and foreign currency, the agency said, adding that this, combined with high levels of bureaucracy, could make it difficult to transfer hard currency abroad.

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