Petrobras says Venezuela JV may be unprofitable

RIO DE JANEIRO, Brazil (Reuters) - A switch from operating service agreements in Venezuela to joint ventures with state oil company PDVSA may turn out to be unprofitable for Brazil's Petrobras, Chief Executive Jose Sergio Gabrielli said on Monday.

A group of private and foreign oil companies including Petrobras' (PETR4.SA: Quote, Profile, Research, Stock Buzz)(PBR.N: Quote, Profile, Research, Stock Buzz) Argentine unit Petrobras Energia are negotiating with the leftist government of Venezuelan President Hugo Chavez to convert their operating agreements to new joint ventures giving a majority controlling stake to

PDVSA.

Asked whether such a venture will be profitable, Gabrielli said at the Reuters Latin America Investment Summit: "If we analyze it individually, probably not. But it is a complex of deals that we have to analyze."

He said there were various opportunities being discussed in Venezuela such as Petrobras participation in the Mariscal Sucre offshore natural gas project, in production of extra heavy Orinoco belt oil, and in various onshore mature fields, as well as ethanol exports to Venezuela.

"Contract conversion is just one of 14 business projects ... Petrobras Energia already announced the impact, and for Petrobras itself the impact will be very small," he said.

Petrobras Energia took 420 million pesos ($136 million) in provisions in its 2005 results due to changes in the terms of its operations in Venezuela due to expected "deterioration of the value of assets in Venezuela".

Venezuela, the world's No. 5 oil exporter, is tightening state control over its energy sector.

The Chavez administration expects by April to have congressional approval for a model contract that will outline the business structure for the new deals.