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Company News: Exxon, Conoco won’t sign new Venezuelan oil deal

Wed., June 27, 2007, midnight

Exxon Mobil Corp. and ConocoPhillips refused to sign deals Tuesday to keep pumping heavy oil under tougher terms in Venezuela’s Orinoco River basin, signaling their departure from one of the world’s largest oil deposits.

Analysts said the move, however, won’t have a major effect on supplies or lead to higher prices at U.S. pumps because production by the two companies will shift to other producers who agreed to the pacts.

Four major oil companies — U.S.-based Chevron Corp., BP PLC, France’s Total SA and Norway’s Statoil ASA — signed deals to accept minority shares in the oil projects under new terms set by President Hugo Chavez’s government.

“Exxon Mobil is disappointed that we have been unable to reach an agreement on the terms,” the Irving, Texas-based company said in a statement. “However, we continue discussions with the Venezuelan government on a way forward.”

Elogio Del Pino, a director of the state oil company, said Houston-based ConocoPhillips, the third largest U.S. oil company, is not leaving the country completely and will maintain a 50-percent share in the Deltana Platform natural gas project.

Officials said Exxon Mobil, the world’s largest publicly traded oil company, will have no remaining oil interests in the South American country.

Altria Group Inc., parent of the Philip Morris cigarette companies, will cut in half its U.S. manufacturing base, closing a North Carolina plant that employs 2,500 as it moves cigarette production for non-U.S. markets to Europe.

The manufacturing shift announced Tuesday comes amid a declining U.S. cigarette market and Wall Street speculation that Altria would soon move to split its domestic and international tobacco businesses into two companies.

Philip Morris USA will transfer all production from its Concord, N.C., plant in Cabarrus County to its Richmond production center, which will become its sole American manufacturing plant by 2011.

The Richmond plant also will switch from making cigarettes destined for both U.S. and international markets to a strictly domestic market.

In 2006, the two plants produced 80 billion cigarettes for overseas distribution. Those cigarettes will now be produced in European plants, though Philip Morris International has not specified which ones, explained David Sylvia, a spokesman for Philip Morris USA.

Altria shares rose 88 cents, or 1.3 percent, to $69.63 Tuesday.


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