Venezuela Takes Control of Oil Fields

[mazdamazda]

The below news is not the most updated but it contains good vital information.

The nerve of this guy... first he is artificially jacking up world oil prices though the OPEC and now he is taking control of the oil fields which companies spent billions for over a decade developing.

Venezuela Set to Assume Control of Its Oil Fields
Analysts Question State Firm's Readiness for Move

By Juan Forero
Washington Post Foreign Service
Tuesday, May 1, 2007; Page A12

CARACAS, Venezuela, April 30 -- President Hugo Chavez's government will take control Tuesday of what might be the world's richest oil fields, a huge swath known as the Orinoco Belt that Big Oil has spent a decade and nearly $20 billion developing.

In the past two years, Venezuela, like energy-rich countries from Russia to Bolivia, has exerted increasing control over its oil. But now, Chavez's administration will take its biggest leap yet, with the state oil company assuming a 60 percent stake in four projects previously run by multinationals, including ExxonMobil, ConocoPhillips and Chevron.

The shift is being greeted with revolutionary fervor. "For the country's workers, it's a day to celebrate," Energy Minister Rafael Ramirez said recently.

Despite the pomp of the occasion, many oil analysts question whether the state company, Petroleos de Venezuela, is prepared to oversee the development of projects in the country's north that, if fully exploited, could give Venezuela the largest certified oil deposits in the world.

The firm, which previously had a minority stake in each of the projects, will now be better positioned to make key decisions on production and refining, and on how to manage the workforce. It will also assume more responsibility for investments. But the fields contain a heavy, molasses-like oil that is highly expensive and problematic to refine -- and the state company could face severe financial and technical challenges, analysts say.

On the surface, PDVSA, as the company is best known, appears stronger than ever. It is among the world's top five oil companies and exports to the United States, Europe and distant China. Last year its revenue, including refineries and the Citgo retail arm in the United States, topped $100 billion.

PDVSA has also become a tool for social change in the president's self-styled revolutionary government, spending nearly $12 billion last year to alleviate poverty and helping run programs from home building to literacy training.

But oil analysts say the pace and scope of the expenditures on social programs, up from $549 million in 2003, are hitting the company hard, leaving it vulnerable.

Company filings and interviews with oil analysts show that PDVSA has failed to invest in infrastructure and is unable to ratchet up production. If prices tumble -- unlikely in the near term, but almost certain in a historically volatile industry -- the company would have difficulty making up for the shortfall, troubling for a country that depends on PDVSA for three-quarters of its export revenue.

"I think the consensus is that the company is in a very weak position," said David R. Mares a Latin America expert at the University of California at San Diego and co-author of a study of the firm. "For PDVSA, that's a particular problem because it means that with their inefficiencies, with higher prices, it's difficult for them to explore and to do more. They have multiple points where they're significantly weaker."

Francisco J. Monaldi, an oil expert at the Institute of Superior Administrative Studies in Caracas, said that a fiscal crisis could take time to materialize, given the huge financial reserves the government has accumulated because of high oil prices. But he said the government could be in trouble if the price falls below $50 a barrel for more than a year.

"The current rate of increase in public expenditures is not sustainable," he said. Monaldi argued that a significant drop in oil prices would leave the government with two difficult options, cutting social programs or raising production. "If Venezuela wants to increase production, it will be hard, very hard, because it will require a lot of investments, $7 billion or $8 billion a year," he said, noting that investment has fallen fall short of that.

Venezuelan officials heatedly reject such arguments, although they are common among oil analysts in the United States and Latin America.

"Of course, it's prepared," Bernardo Alvarez, Venezuela's ambassador to Washington and a former vice minister of energy, said in reference to PDVSA's expanding responsibilities. "PDVSA is very solvent, and it is one of those companies that has a great capacity to carry out big projects, internally or internationally."

PDVSA was considered one of Latin America's few well-run state energy companies, producing about 4 million barrels of oil and derivatives a day in the late 1990s. But by 2002, angered by what they saw as government meddling in the company, thousands of white-collar workers had joined the ranks of an opposition movement that launched a protracted strike in December 2002 to topple Chavez.

The government fired 18,000 workers, saying that the company had been run by elites beholden to the corrupt practices and politicians, not to the Venezuelan people. Now, government officials say, PDVSA is a company of the people that is helping extricate Venezuelans from grinding poverty.

"You don't have a company that gives the shoulder to the country," Alvarez said, "but one that is instead crucial to the development of the country."

The new PDVSA, under control of the president's allies, produces from 2.3 million to 2.5 million barrels a day, according to oil analysts and figures from the Organization of the Petroleum Exporting Countries (OPEC), of which Venezuela is a founding member. (Venezuelan officials insist they produce more than 3 million barrels daily.) Chavez is OPEC's leading price hawk, and his policies have helped sustain the historically high prices that have proved a bonanza to producers.

Still, Venezuelan officials frequently talk about increasing production to as much as 5.8 million barrels a day by 2012.

Many analysts dismiss that as unrealistic, noting that production has been declining for nearly a decade. Indeed, one sign of PDVSA's lower capacity is that it has far fewer operating wells than in the past, and its plans call for fewer exploratory wells than were used in the Orinoco. "My impression is that PDVSA is not in a free fall, like some opponents say," Mares said, "but there are signs that the company is not capable of realizing investments, and it's fallen a lot."

One sign of PDVSA's limitations is that the company is disputing the value of the four projects in the Orinoco, which the multinationals say now top $30 billion. While the companies and Venezuelan officials remain in talks over compensation and PDVSA's exact role in day-to-day operations, the Chavez government has signaled that it will probably pay book value for Big Oil's investments, possibly in oil or by forgiving taxes. That would save PDVSA from having to come up with billions of dollars that analysts say it doesn't have.

The government says such a move is only fair, because until Chavez hiked royalties and taxes, the multinationals had enjoyed a virtual tax holiday in the Orinoco.

"Don't anyone try to abuse our good faith," Chavez warned at a recent news conference. "We know the exact cost of every meter of pipeline, every installation that's been made, every investment made."

[Karding]

and he pulled out of IMF and World Bank (5-hours ago). Ano pa kaya ang ultimate goal nya...

The Orinoco Basin, 592km long and 69km wide, stretches along the Orinoco River in eastern Venezuela and is believed to hold the world's largest crude oil reserves. Venezuela says it could hold as much as 370-billion barrels, compared with the country's current oil reserves of about 80-billion barrels.

Chávez followed up the move with a strong attack on the Washington-based World Bank and IMF, accusing them of exploiting small countries. The two organisations were "mechanisms of North American imperialism", he said.

After using oil receipts to pay off $3-billion to the international financial institutions last month, Chávez said he wanted to "formalise" his country's exit from the bank and the IMF. "We are going to withdraw ... and let them pay back what they took from us," he said, claiming the organisations were "in crisis".

ahh, sya pala ang dahilan kung bakit magiging $4/gallon+ ang fuel. akala ko yung "iba" ang dahilan, Venezuela pala.

Newly bought Russian-made fighter jets streaked through the sky as Mr. Chávez shouted "Down with the U.S. empire!" to thousands of red-clad oil workers.

via Dallas News.

[oldblue]

mukang kailangan na naman i-activate ng US ang storm weapon nila at bigyan ng hurricane ang south american countries

[empy]

nice job Hugong Siraulo....

say bye bye to FDI for the next 20 years...

[niky]

Chavez really went on a spending spree when oil prices spiked last year. It's caused lots of problems for him... something that this move might not help.

IMHO, he's just throwing his country's wealth down the toilet.

[GasJunkie]

He should do it the filipino way,sell everything cheaply then buy it back at (insert any number)x the original price.




:spider:

[uls]

Hugo Chavez, Kim Jong Il, Mahmoud Ahmadinejad, Vladimir Putin ---

Mabuhay kayo lahat!

[Hanren]

In reel and real life, there will alwys be the 'kontrabidas'..there are still some in the making so watch out for them-sa Turkey, Russia, the Balkan states, Middle East (Syria, Lebanon, etc).

As far as I know, balak pang gumawa ng commonwealth state (or association or whatever you call it) si Hugo Chavez (composed of Latin American Countries). Hinahatak nya Paraguay, Chile, etc. Gusto niyang maging dominant figure sa Latin America just like what Amadinejad is doing in the middle east.

He has the balls to do that-kasi may oil fields eh. Mawala lang yang yaman nya na yan mawawala din yang yabang niya. Ganyang nga mga leftists sa ibang bansa. Kunwari maraming social policies pero ....

[GasJunkie]

continue........




:fly:


edit his choice good or bad for his country > * > joo (for alpha one )

[FullThrottle]

Hugo Chavez likes to call Bush "THE DEVIL," but it seems that he's the one doing one HELL of a job as Venezuela's President...

[creepy]

Hugo Chavez, Kim Jong Il, Mahmoud Ahmadinejad, Vladimir Putin ---

Mabuhay kayo lahat!

George Dubya Bush!!

Mabuhay!!

Mabuhay rin ang bumoto sa kanya!

[wildthing]

Well, imo, if the oil is in venezuelan geographical boundary, he really have the right (as a president of his country)....put it this way, it is his role to protect his country's wealth and interest.

[mmanson]

given the right situation, anybody can be the "kontrabida". Chavez shouting "down with the US empire"? and then what?
.
.
.
.
"ako naman!!!!!(it's my turn!)"

[empy]

Well, imo, if the oil is in venezuelan geographical boundary, he really have the right (as a president of his country)....put it this way, it is his role to protect his country's wealth and interest.

that's really not what's being questioned here. it is true that any freely elected president should be able to protect his country's interests (although tatanga tanga yung opposition niya for boycotting the parliamentary elections a couple years ago - puro bata ngayon niya ang nasa assembly :screwloose: )

the question is, is this really in his country's best interest? or is this just part of his personal vendetta against the US/GWB? if i remember my history lessons correctly, India and a few governments decided to "nationalize" some of their industries a long time ago and as a result of their actions, got very little foreign direct investments for decades.

Chavez might be right that he no longer needs the multinationals to extract and distribute his oil, but he better be comfortable about no other multinational seeking to invest in his country for a long long time. all the other foreign companies will think "if it could happen to Exxon Mobil, then it could happen to me".

[wildthing]

that's really not what's being questioned here...

duh?!?

I was reacting to Mazdamazda's post -

... and now he is taking control of the oil fields which companies spent billions for over a decade developing.

As such, if I were in his (Chavez) shoes, I MIGHT do the same....IF THE MOVE WILL SERVE THE INTEREST OF MY COUNTRY MEN.

Mahirap humusga ng tao (like Hugo Chavez) o desisyon ng isang tao kung wala naman tayo sa lugar niya (unless venezuelan ka o tayo) di ba?!?

Kasi kung news lang naman ang pagbabasihan natin, ang tanong ko ay ano ba ang accuracy ng news na yan?

What if his intension was to make sure that his fellowmen doesn't experience future fuel problem?!?

AFAIK, stupidity nga ang pagboycott ng kalaban niya... pero come to think of it, what if this opposition was the more evil group?!? eh di buti nalang hindi sila sumali or lumaban kay chavez. But that is another topic...

[mazdamazda]

duh?!?

I was reacting to Mazdamazda's post -

As such, if I were in his (Chavez) shoes, I MIGHT do the same....IF THE MOVE WILL SERVE THE INTEREST OF MY COUNTRY MEN.

Mahirap humusga ng tao (like Hugo Chavez) o desisyon ng isang tao kung wala naman tayo sa lugar niya (unless venezuelan ka o tayo) di ba?!?

Kasi kung news lang naman ang pagbabasihan natin, ang tanong ko ay ano ba ang accuracy ng news na yan?

If foreign journalists and other countries can critic the Philippines - why can't we do the same to Venezuela? This is a global interest and not just a "national" issue confined to Venezuela since Chavez started using the OPEC to artificially jack up the price of oil.

As to the accuracy of the news, what is "accurate" for you? Several news agencies printed the same news with the same quotes blurted out by Chavez in a neutral fashion. This isn't something taken from the Dear Xerex section of local tabloid.

What if his intension was to make sure that his fellowmen doesn't experience future fuel problem?!?

He made his intentions clear that this move was to hurt the USA.

Future fuel problem? With Venezuela's ridiculously low gasoline prices? I don't think so. Heck, without the investment & technical know-how of the *imperialist* multinational corporations, they wouldn't be able to turn their tar-like oil to something useful.

He is just saving time by using oil to fund his distorted social programs & economic policies. He maybe popular with the poor right now but once the cash flow dries up - he'll be ousted in no time.

AFAIK, stupidity nga ang pagboycott ng kalaban niya... pero come to think of it, what if this opposition was the more evil group?!? eh di buti nalang hindi sila sumali or lumaban kay chavez. But that is another topic...

If you have been following world events for a while, the Venezuelan opposition is a moderate group while Chavez and his cohorts are on the extreme left.

[boydapa]

yan ba yun nagsabing sa lagay ng presyo ng langis worldwide ngayon eh mura pa ito! wait and see pag natupad ko na ang pinapangarap kong controlin at pataasin ang presyo nito sa dapat nitong kalagyan!---ang dapat dyan eh sya ang ilagay sa kahon ng posporo eh! kulang pa ba yan 40 petot isang litro? ogags

[uls]

E2 ang implications ng actions ni Chavez---

Multinational oil companies had contracts with Venezuela. The oil companies will develop the oil fields, extract the oil, and Venezuela will get a percentage of the profits. That's the arrangement.

Now Chavez takes control of the oil fields. He broke the agreement with the oil companies. He broke contracts. That's the implication.

Ipit ung mga oil companies. Matapos nila itayo ang oil infrastructure, kukunin sa kanila ng ganyan ganyan lang.

Kawawa naman mga oil companies.

---------------------------------------------------

Now the Bush Admin, being very good friends with Big Oil, will come down hard on Venezuela.

But that Chavez guy doesnt give a sh*t about what Bush will or can do. He is taunting Bush.

That's exactly what he is doing. He did this to taunt Bush.

It's like Chavez is telling Bush "Ano gagawin mo ngaun ha?" ..... "Sige nga, ano gagawin mo?"

[Isuzoom]

Hugo Chavez is a madman...

[BlueBimmer]

lapit lang venezuela diba...sugurin mo na bushy boy!