ChevronTexaco decries excessive LatAm regulations

Reuters, 04.29.03, 12:02 PM ET

WASHINGTON, April 29 (Reuters) - A top United States oil executive on Tuesday urged Mexico, Brazil and other Latin American nations to ditch "unstable fiscal and regulatory systems" that discourage more oil investments in an energy-rich region that supplies one-third of U.S. oil imports.

Even though progress has been made, David O'Reilly, the chairman of ChevronTexaco Corp. (nyse: CVX - news - people), said "many countries in the region still have unstable fiscal and regulatory systems from our perspective, and for our investors. This raises risk and reduces confidence."

O'Reilly spoke before the annual Council of the Americas conference on Latin America, which brings together top business and political leaders to discuss prospects for the region. Council members usually back lower trade barriers with Latin America, which is slowly emerging from economic hard times.

The ChevronTexaco executive said Latin America's "future challenges" range from export taxes in Argentina to foreign ownership limits in Venezuela. These regulations, O'Reilly said, discourage "the very large and long-term investments that are industry's mainstay."

O'Reilly, whose company has invested around $4 billion in the region, said he is "closely watching" Argentina's export tax -- a key source of government revenue for that country -- and how "Brazil handles the local content issue."

"Some countries have deliberately erected barriers to foreign investment, at least in our business," the executive said, noting Mexico's ban on foreign oil investments and Venezuela's 49 percent cap on foreign ownership of new oil investments.

The Venezuelan regulations deny the country access to "a new effective form of private investment, and that is project financing," he said. "Governments must weigh the consequences of actions such as these and their impact on trade and foreign investment."