US oil firm counts Venezuela cost

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US oil giant ConocoPhillips has blamed the cost of exiting Venezuela for a 95% drop in second quarter profits.

Net income in the three months to June sank to $301m (£146.6m) or 18 cents a share, compared with $5.19bn or $3.09 per share at the same time last year.

Excluding the $4.5bn cost of quitting Venezuela, earnings were $2.90 a share.

Venezuela took over the firm's Orinoco Belt operations when it refused to cede control of the assets to the country as part of its nationalisation drive.

State takeover

In May, President Hugo Chavez announced that the state-run oil firm PDVSA would take over control of exploration projects in the Orinoco Belt, which had been among the last privately-run fields in the country.

It is the country's most important oil area, with massive potential as it holds proven reserves of at least 80 billion barrels.

During the negotiations that followed, Norway's Statoil has agreed to reduce its 15% stake in a project to 10%; while BP, Chevron and Total have also signed deals to take minority stakes.

ConocoPhillips had warned its decision not to accept a minority stake in the oil field would lead to a multi-billion dollar charge.

The firm is still negotiating with the government over compensation, as is US firm ExxonMobil.

Elsewhere in the business, higher margins from its refinery production and lower maintenance costs helped offset a drop in oil and natural gas production.

The group said earnings from refined fuels rose 38% to $2.36bn between April and June.