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Now Chavez Wants Western Oil Co’s Back

From a dismayed New York Times:

Chávez Lets West Make Oil Bids as Prices Plunge

Published: January 14, 2009

CARACAS, Venezuela — President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again.

Until recently, Mr. Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases.

But faced with the plunge in prices and a decline in domestic production, senior officials have begun soliciting bids from some of the largest Western oil companies in recent weeks — including Chevron, Royal Dutch/Shell and Total of France — promising them access to some of the world’s largest petroleum reserves, according to energy executives and industry consultants here.

Their willingness to even consider investing in Venezuela reflects the scarcity of projects open to foreign companies in other top oil nations, particularly in the Middle East.

But the shift also shows how the global financial crisis is hampering Mr. Chávez’s ideological agenda and demanding his pragmatic side. At stake are no less than Venezuela’s economic stability and the sustainability of his rule. With oil prices so low, the longstanding problems plaguing Petróleos de Venezuela, the national oil company that helps keep the country afloat, have become much harder to ignore.

Embracing the Western companies may be the only way to shore up Petróleos de Venezuela and the raft of social welfare programs, like health care and higher education for the poor, that have been made possible by oil proceeds and have helped bolster his popular support

While the new oil projects would not be completed for years, Mr. Chávez is already looking beyond the end of his current term in 2012 by putting forward a referendum, expected as early as next month, that would let him run for indefinite re-election.

In recent years, Mr. Chávez has preferred partnerships with national oil companies from countries like Iran, China and Belarus. But these ventures failed to reverse Venezuela’s declining oil output. State-controlled oil companies from other nations have also been invited to bid this time, but the large private companies are seen as having an advantage, given their expertise in building complex projects in Venezuela and elsewhere in years past

Mr. Chávez’s olive branch to Western oil companies comes after he nationalized their oil fields in 2007. Two companies, Exxon Mobil and ConocoPhillips, left Venezuela and are still waging legal battles over lost projects.

But Venezuela may have little choice but to form new ventures with foreign oil companies. Nationalizations in other sectors, like agriculture and steel manufacturing, are fueling capital flight, leaving Venezuela reliant on oil for about 93 percent of its export revenue in 2008, up from 69 percent in 1998 when Mr. Chávez was first elected.

In the past year, with higher oil prices paving the way, Mr. Chávez also vastly expanded Petróleos de Venezuela’s power, inextricably linking it to his political program. He directed the oil company to build roads, import and distribute food, build docks and shipyards and set up a light-bulb factory. He even expanded it into areas like milk production, soybean farming and the training of athletes after a weak performance at the Beijing Olympics.

One of the oil company’s ventures sells subsidized food and extols Mr. Chávez’s leadership at its stores across Venezuela. At one frenzied store in eastern Caracas, posters hung from the ceiling last Saturday showing Mr. Chávez arm in arm with children beneath the heading, “fortifying agrarian socialism.” …

“In 10 years, not one major oil project has been built in Venezuela,” said [an] oilman, who asked not to be identified for fear of retribution. “Chávez has left his so-called strategic partners out to dry, like the Chinese, who have been given the same treatment as Exxon.”

But the severity of the drop in oil prices may ultimately dictate the terms on which Venezuela re-engages with foreign oil companies.

“Chávez is celebrating the demise of capitalism as this international crisis unfolds,” said Pedro Mario Burelli, a former board member of Petróleos de Venezuela. “But the irony is that capitalism actually fed his system in times of plenty,” he said. “That is something Chávez will discover the hard way.”

Of course it is the prerogative of a sawed-off cocaine-addled tin horn dictator of a banana republic to change his mind.

But let’s hope the oil companies have learned their lesson. Though that is unlikely.

Still, isn’t funny how the New York Times is also changing its tune.

(Thanks to Sheehanjihad for the heads up.)

This article was posted by Steve on Thursday, January 15th, 2009. Comments are currently closed.

7 Responses to “Now Chavez Wants Western Oil Co’s Back”

  1. sheehanjihad says:

    And to give you something to smile about…..the Snag’s boyfriend is in a pickle..and here’s why. A wonderful feeling of karma!


    • dulcimergrl says:

      Great article, SJ. Now if only someone who has some power will do something about this obvious fraud…

  2. 1laidbackRN says:

    It’s funny how all it took was a drop in oil prices to show this prick how truly insignificant he is.

  3. 12 Gauge Rage says:

    So,…the obnoxious petro thug from Venezuela is starting to feel the pinch and it isn’t from the tight pants wrapped around his fat waist. When he was reaping the profits from higher oil prices it was easy for him to shoot off his mouth and tell us ‘Yankee go home.’ Now that he’s lost a lot of revenue from a slumping world economy, and pissed off a lot of potential foreign investors, he’s discovering that he needs us more than we’ll ever need him. But more importantly to me is that Chavez is bitterly discovering that no matter how well you season it, eating crow tastes horrible. One last thing, these comments also apply to Mr. Putin of Russia as well.

  4. proreason says:

    What a sweet side-effect of lower oil prices it would be if this oozing scumbag were overthrown.

    But he’s no different than our own policitians, dancing like children when the winds blow thier way, and lying and demeaning themselves like prostitutes to cling to power when their loonie schemes go awry.

    In fact, I think he must be related to Barney Franks, or at least, he must have a relationship with him.

  5. JohnMG says:

    Still doesn’t matter. Remember, as of January 20th, Chavez will have an ally in the White House. Socialists and ‘mental midgets’ (I know, I’m repeating myself) think alike. Anybody want to bet what Obama’s move will be? I don’t!

  6. Barbie says:

    We’ll probably see Congress give Chavez bailout money.

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