New Deal in Oil

President Marcos Perez Jimenez last week made the announcement that everyone interested in the Venezuelan oil industry had awaited for ten years. The government, said he, has decided "to open the doors to offers" for new concessions to oil lands, the first since 1945. As to the terms, said Perez Jimenez, whoever offers the most in royalties and "advantages" to Venezuela will get the concessions. That meant, in plain words, that Venezuela wants to break through the familiar 50-50 formula--the worldwide pattern set in Venezuela a decade ago, of splitting profits equally between the oil companies and the government. Instead Venezuela clearly hopes to veer, in future concessions, toward 60-40 or more in favor of the government.

Actually the companies are already paying more than 50-50, the government pointed out; with tax adjustments, the present operators have lately been paying 56-44. As to the additional "advantages" Venezuela will expect, Perez Jimenez wants concessionaires to 1) refine new-found crude in Venezuela, 2) build "open cities" instead of company-town oil camps, and 3) conserve natural gas.

The government will give frank preference to European companies over the dug-in U.S. firms, which now number 13 of the 14 operators in Venezuela. The presumed reason: Venezuela has become fearful of its dependence on the U.S. market, always open to pressure from the well-oiled tariff bloc in Congress, and wants to get a cut of the European market as a hedge. Preference or no preference, huge Creole Petroleum Corp., a Standard Oil Co. (N.J.) affiliate, announced a $200 million expansion program, and prepared to bid for new concessions.

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