Venezuela Continues Descent

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(T)Hugo Chavez has now taken the easily foreseen step of seizing foreign owned oil projects in Venezuela. (Raise your hand if you didn't see this coming, then slap yourself). He plans on "occupying" the oil fields as soon as possible.

Chavez had previously announced the government's intention to take a majority stake by May 1 in four heavy oil-upgrading projects run by British Petroleum PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Total SA and Statoil ASA.

He said Monday that has decreed a law to proceed with the nationalizations that will see state oil company Petroleos de Venezuela SA, or PDVSA, taking at least a 60 percent stake in the projects.

"The privatization of oil in Venezuela has come to an end," he said on his weekday radio show, "Hello, President." "This marks the true nationalization of oil in Venezuela."

By May 1, "we will occupy these fields" and have the national flag flying on them, he said.

The law is expected to be published shortly in the government's official gazette, and the companies will have four months from then to negotiate terms and conditions with PDVSA to decide whether they will take part in new joint ventures as minority partners, Chavez said.

Chavez did not detail how the government will pay for its increased share in the projects in which the companies are estimated to have invested some $17 billion.

Here's a hint: (T)Hugo won't pay for what he is stealing. If anything at all, the companies will be offered pennies on the dollar with a take it or leave it message. Exactly what he already did with the electric utility, in fact. Foreign investment will dry up completely in Venezuela now. Chavez will preside over collapsing infrastructure and nose-diving production.

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7 Responses to Venezuela Continues Descent

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  2. Kris Bravo says:

    Stealing? Did you see the terms under which the oil companies had access to the fields? They were insanely slanted to the corporations! The people who negotiated them should be declared enemies of Venezuela. They gave the country’s resources away.

    How do you steal something stolen from you? The Venezuelans are wise to re-elect Chavez for now…

  3. K T Cat says:

    As I understand it, his radio show, “Hello, President” is also known as “Howdy, doody.”

  4. Kathy says:

    “How do you steal something stolen from you?”

    Bravo for Kris Bravo!

    I was going to type something like, “Uh, correct me if I’m wrong, but the country those oil projects are in — isn’t it the Venezuelan people’s country?” but you beat me to it. :)

  5. Chris says:

    Right. The Venezuelan people discovered the oil fields, manufactured the equipment to drill for and transport the oil, and formed corporations to handle the labor and financial aspects of this undertaking.

    Wait, they didn’t do any of these things. Without foreign “exploitation” of their resources, the Venezuelans would be literally sitting on their oil reserves. Whether former governments failed to negotiate good deals on the terms of the agreements with said foreign devils is beside the point. Without the industrialized world’s need for oil, and the subsequent development of a separate industry to fill that need, third world nations with significant oil reserves would be untouched by filthy capitalist hands, and free from all of that filthy money that the evil imperialists pay them for said oil.

    I don’t know what percentage of Venezuela’s GDP is from oil, but I’ll wager it’s very significant. So, Venezuelans would have been free to enjoy their lower per capita incomes and standard of living, and all of the fringe benefits that come from that, like increased longevity and health.

  6. Yet another thread infested with Moonbatticus Nonsenseicus. Let’s put some facts out.

    Venezuela was the world’s first Oil Tick. From 1912 on everything in the economy evolved around oil. To the detriment of agriculture and industrialization. To further that in 1943 Venezuela passed the “Hydrocarbons Act”. This law stated that foreign companies could not profit more from Venezuela oil than it paid Venezuela in taxes.
    In the late 50’s there was a glut of oil due to increased Middle Eastern oil production (more Evil Americans). To counter that Venezuela was the primary instigator of the creation of OPEC.

    The Oil Embargo made income from oil production the literal Golden Egg for Venezuela. The country formed Petroleos de Venezuela and in 1976, following a global trend, Venezuela nationalized the oil industry. Everything reverted to the State Oil Company…Petroleos de Venezuela.

    By 1996 Petroleos de Venezuela had done a fine job of exploiting the easy oil at the expense of the hard to pump oil. That would be the oil in Corocoro and Orinoco Oil Belt. In order to exploit these fields Venezuela invited Conoco to invest technology nad capital. Soon other Big Oil corporations were investing in Venezuela. All with the understanding that no more Nationalizations would occur.

    Meanwhile Thuggo was pressing to reinvigorate OPEC. Which succeeded in driving the price of oil higher.

    In 2005 Venezuela informed Conoco-Phillips and other investors that it wanted to broaden the scope of who provided capital. To that end Good Oil Companies like Luka and TotalFina ELF jumped into Venezuela. and promised them no nationalization

  7. To finish: Foreign Big Oil should have known better. Yet in 2005 Venezuela was still courting capital and technological investment:

    Caracas, Venezuela. February 13, 2005 (— An oil deal that will involve $10 billion in investments over five years and that Venezuela had put on hold has been renegotiated. Four weeks ago the decision to put the agreement on hold had raised concern among investors that Venezuela might turn its back on multi-billion dollar investments.

    Meanwhile Venezuela, through Thuggo’s “Organic Law of Hydrocarbons”, began charging the highest royalties in the world. Yet Big Oil kept putting in money. Their Bad.

    So, in fact, everything Mr. Bravo says is untrue. Venezuela hasn’t profited from oil because it’s elites have systematically looted the profits. The State Oil Company is incredibly labor heavy…particularly in middle management. And almost none of this has changed under Thuggo. In fact PVDSA was finally becoming a profitable company with guidance from Conoco-Phillips until Thuggo began to put his _own_ people in the kleptocrat’s seat.

    The good news for America is that Venezuela’s oil isn’t what we really need. Heavy and extra-heavy crude is hard to extract, hard to ship and hard to refine. We do much better with what we get from Alberta. So as South America once again sinks into an era of despotism, this time of the Lefty sort, we will still not suffer overly much.

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