Resource nationalism could limit supplies: IEA

LONDON (Reuters) - Oil producing countries have the right to renegotiate contracts to win back some of the huge profits generated by high prices, but nationalization of resources can limit output, the head of the IEA said on Monday.

Venezuelan President Hugo Chavez has spearheaded a drive among Latin American energy producer governments to grab more money and control from foreign investors, raising fears among consumer nations of inflated energy prices for years to come.

"You can try to renegotiate some contracts to ensure profits from some very high prices are fairly shared between the owner, that's the country, and the companies. You can do that, but you should not do it too much," IEA Executive Director Claude Mandil told a Reuters Energy Summit.

Beyond short-term profits, he said he was concerned nationalization could hamper efforts to get the most out of the world's energy supplies.

"I think all the records show that when you nationalize, generally it does not favor an increase in investment or an increase in capacity and that's our concern," he said.

At the other end of the scale from nationalized oil companies, international oil companies (IOCs) have also come under fire for not investing enough in the past to generate adequate supplies.

Mandil said they were now doing all they could by investing heavily in exploration and production and in downstream refining projects.

"They are spending much more money on exploration," Mandil said of the oil companies.

"I'm not sure we can ask them to do more," he said, but added the effort needed "to be sustained for several years."  Continued...