It's difficult for me to say what's involved here without knowing the details. It is important to remember that much of the leftward movement in South America is due to frustration over foreign ownership of national resources. Venezuela was in this position. Bolivia is probably the worst-off. Opposition to the Venezuelan government will of course cry foul and talk about Chavez creating a climate unfavorable to international investors. This may be true. As I've said several times, however, nothing having to do with Venezuela can be taken at face value.
On Monday, Rafael Ramirez, the oil minister, said Venezuela seized two oil fields from France's Total SA and Italy's Eni SpA after the companies failed to comply with a government demand that operations be turned over to state oil company Petroleos de Venezuela SA, or PDVSA.He said: "Those two companies resisted adjusting to our laws. Those fields return to total, absolute control by Petroleos de Venezuela."...
Private oil companies had run 32 oil fields in Venezuela independently under contract with the government. But Venezuela demanded last year those contracts be changed into so-called "mixed company" joint ventures that give PDVSA a minimum 60% stake...
Ramirez said 20 companies, including Spanish-Argentine Repsol YPF, Royal Dutch Shell PLC and China National Petroleum, representing 25 oil fields have signed on to the new legal framework to create joint ventures.
A bit more from today on Chavez's understanding of where things are going and what this means for the US. This is from
Greg Palast:
In an exclusive interview with Greg Palast for BBC Newsnight the Venezuelan President Hugo Chavez has ruled out any return to the era of cheap oil.
The colourful Venezuelan leader hosts the OPEC meeting on June 1 in Caracas and he will ask OPEC to set $50 a barrel - the average price last year - as the long term level. During the 1990s the price of oil had hovered around the $20 mark falling as low as $10 a barrel in early 1999.
Chavez told Newsnight "we're trying to find an equilibrium. The price of oil could remain at the low level of $50. That's a fair price it's not a high price". Hugo Chavez will have added clout at this OPEC meeting.
US Department of Energy analyses seen by Newsnight show that at $50 a barrel Venezuela - not Saudi Arabia - will have the biggest oil reserves in OPEC. Venezuela has vast deposits of extra heavy oil in the Orinoco. Traditionally these have not been counted because at $20 a barrel they were too expensive to exploit - but at $50 a barrel melting them into liquid petroleum becomes extremely profitable.
The US DoE report shows that at today's prices Venezuela's oil reserves are bigger than those of the entire Middle East including Saudi Arabia, the Gulf states, Iran and Iraq. The US DoE also identifies Canada as another future oil superpower. Venezuela's deposits alone could extend the oil age for another 100 years.
The US DoE estimates that Chavez controls 1.3 trillion barrels of oil - more than the entire declared oil reserves of the rest of the planet. Hugo Chavez told Newsnight's Greg Palast that "Venezuela has the largest oil reserves in the world. In the future Venezuela won't have any more oil - but that's in the 22nd century. Venezuela has oil for 200 years." Chavez will ask the OPEC meeting in June to formally accept that Venezuela's reserves are now bigger than Saudi Arabia's.
4 comments:
Interesting nuance about how political and economic influence in oil varies with the price. I'm vaguely versed in "Peak Oil" but don't remember thinking about that aspect. Of course, you could get carried away with such thinking. By atom smashing and nuclear fusion we can convert straw to gold, but that doesn't make it sensible to talk about gold reserves above-ground in Kansas.
I like the sound of that last line, MT. But I don't get it.
Jason - VZ thinks it can control oil prices and gain as much wealth as possible over the next 100 years or so. Why not? The US isn't going to wean itself from oil anytime soon, and that's 50% of VZ's market. And then there's China. Chavez at least knows they're going to run out at some point. Like a star athlete with a limited career-span, he's going for the largest income possible over that period of time. The VZ state is trying to invest in infrastructure and to diversify the economy while it can.
I met with PDVSA officials when I was in Caracas and asked about foreign ownership.As you stated they can enter into a 60/40 partnership and pay for the rights to extract, ship, and refine oil and sell it wherever they like but the PEOPLE of Venezuela own the actual resource and PDVSA.Many corporations see plenty of profit in this relationship to continue doing business, others will take their chances in other parts of the world.The US state dept. and mainstream media would like us to believe he is initiating Castro-like appropriation of land and businesses so that the righteous will rise up in anger at such injustice ie. US militaty intervention, another coup,assasination etc.
The same critics who point to the lack of diversification in the economy say nothing about Middle East petro states.They have not even explored the possibilities of deep drilling but at 50$ per a great deal more becomes feasable.While they attempt to slightly increase production (maintaining high prices) much depends on refining capacity (0ne huge refinery is being built as we speak, two others planned).There is also talk of a pipeline to make shipping to far east more economical.
This is from a PDVSA brochure:"PDVSA is dedicated.. to raising the value of the human being as an integral person.We suffer from problems of social and economic injustice to which we must add strong GEOPOLITICAL PRESSURES..and emphasize the fight against poverty..we claim the sovereign right of our peoples to handle their own energy resources and to place them at the service of the people...Not your basic Conoco -Philips and thats why Condi cannot stand it.
My somewhat trivial point in the last line was just that some costs aren't prohibitive just for now but in effect forever. I guess it's only a cute or academic point, because I had to price a kooky goal that I suppose nobody will be pursuing this century--mass producing heavy elements by the kilogram through nuclear fusion (atom smashers take an army and cost a fortune to run, and still they make new elements just a few atoms at a time). It's trivial in that the very same point undergirds Peak Oil discussions, except I was talking about taking it too far. i.e. the point that some places you could get the oil, and so you should count that oil in, while other places you'll never get the oil (profitably) and so you shouldn't that oil. Sorry to take your time and mine.
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