The company is now seeking new partners, which could include countries such as Iran, Brasil, Saudi Arabia and Japan.

Exxon Mobil said Tuesday that Pequiven had suspended a preliminary development agreement (PDA) for a planned 50-50 joint venture to develop a $3 billion olefins plant in the eastern Venezuela city of Jose.

Pequiven said the government has roughly $4 billion in a national development fund earmarked for petrochemicals development, some of which could be used to finance the olefins project.

Venezuelan President Hugo Chavez last year launched a major campaign to boost the petrochemical sector in an effort to create new downstream jobs and reduce dependence on oil revenues.

The country - the world's No. 5 crude oil exporter - hopes to boost petrochemical production to 25 million tonnes per year by 2012 from 11.4 million tonnes in 2005 through an ambitious $10 billion investment program.

Exxon Mobil's removal comes as Venezuela's government is seeking to boost oil industry revenues by changing deals with foreign partners. The Houston oil giant has consistently opposed Venezuela's efforts to change the terms of the contracts.

Thirty-one other private companies agreed last year to a forced migration of their operating service agreements to state-majority joint ventures after the Venezuelan government declared them illegal.

FAVORABLE POLITICAL ENVIRONMENT

Despite the evident rubs between foreign oil majors and the Venezuelan government, Rina Quijada, a consultant with Miami-based IntelliChem, said petrochemicals is still a good business in Venezuela

"Today I see the whole political environmental favorable to petrochemicals development, and this is so critical in Latin America," Quijada said. "The main objective is to process natural resources and add value to them so you can create jobs."

Chavez, a fiery former soldier and ardent critic of George W. Bush, has promised a socialist revolution and a new economic vision dubbed "endogenous development."

The nation is seeking to boost its manufacturing capacity by adding value to its oil through industries like fertilizers and plastics.