Monday, January 19, 2009

Chavez lets West Make Oil Bids as Price Plunge

January 15, 2009
Chávez Lets West Make Oil Bids as Prices Plunge
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.
“If re-engaging with foreign oil companies is necessary to his political survival, then Chávez will do it,” said Roger Tissot, an authority on Venezuela’s oil industry at Gas Energy, a Brazilian consulting company focusing on Latin America. “He is a military man who understands losing a battle to win the war.”
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.
The bidding process was first conceived last year when oil prices were higher but Petróleos de Venezuela’s production decline was getting impossible to overlook. Still, the process is moving into high gear only this month, with the authorities here expected to start reviewing the companies’ bidding plans on new areas of the Orinoco Belt, an area in southern Venezuela with an estimated 235 billion barrels of recoverable oil. Altogether, more than $20 billion in investment could be required to assemble devilishly complex projects capable of producing a combined 1.2 million barrels of oil a day.
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.”
Petróleos de Venezuela has also carried out nationalizations in other industries, absorbing companies like Electricidad de Caracas, the utility serving this city of five million. Top executives like Eulogio del Pino, the Stanford-educated vice president for exploration and production, spent much of 2008 negotiating unfinished deals like the takeover of a cement company.
But all the while, Petróleos de Venezuela has faced its own difficulties. It claimed it produced about 3.3 million barrels a day throughout most of 2008. But other sources, like OPEC, of which Venezuela is a member, place the figure closer to 2.3 million and show a fall of about 100,000 barrels a day from a year earlier. When Mr. Chávez rose to power a decade ago, Venezuela was producing about 3.4 million barrels a day.
Rafael Ramírez, the energy minister and president of Petróleos de Venezuela, did not respond to requests for an interview. But energy executives here with contacts within Petróleos de Venezuela said Mr. Ramírez, a confidant of Mr. Chávez, has been waging a struggle within the company to refocus operations toward producing more oil.
After weathering the turmoil of recent years, Western oil companies here are loath to speak publicly about their plans. “We don’t elaborate on bidding processes beyond the fact that we evaluate every opportunity and our decisions will be based on economics and other factors,” said Scott Walker, a spokesman for Chevron.
But energy executives here speak with restrained optimism. Nineteen companies paid $2 million each last month for data on areas open for exploration, twice what such data costs elsewhere.
Oil companies say they recognize the risk of investing in Venezuela, given the country’s abrupt shifts in the past. But they focus on the long-term potential of its petroleum reserves. Venezuela poses little risk in the search for oil since geologists have known for years where it lies in the Orinoco Belt.
Venezuela also differs from top oil nations like Saudi Arabia and Mexico, where national oil companies have monopolies. Petróleos de Venezuela let private companies remain as minority partners after the nationalizations, despite Mr. Chávez’s often aggressive anticapitalist stance.
Moreover, foreign oil services companies like Halliburton, which has done business in Venezuela for 70 years, have even expanded their activities in the country as Petróleos de Venezuela grew more dependent on contractors to help extract oil from aging wells.
Still, doubts persist over the chances that the new bids, which are set to conclude in June, will ultimately result in finished oil projects. Risks of operating here were underscored again last week when Venezuela ordered new production cuts along with other OPEC members, impacting ventures with private partners.
Under the current bidding rules, the onus for financing the new projects lies with the foreign companies, even though Petróleos de Venezuela would maintain control. Banks might balk at such a prospect. Distrust also lingers in dealing with Petróleos de Venezuela.
“An agreement on a piece of paper means nothing in Venezuela because of the way Chávez abruptly changes the rules of the game,” said a Venezuelan oil executive who has had dealings with oil companies from China, Russia and other countries.
“In 10 years, not one major oil project has been built in Venezuela,” said the 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.”

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Wednesday, February 20, 2008

Chavez says Venezuela will continue oil exports to US

Chavez can't live without Venezuela money........
vdebate reporter
Feb. 17, 2008, 3:20PM
Chavez says Venezuela will continue oil exports to U.S.
Associated Press

CARACAS, Venezuela — President Hugo Chavez sent a soothing message to American motorists on Sunday, saying Venezuela is not preparing to cut off oil shipments to the United States.
The socialist leader rattled oil markets last Sunday when he threatened to halt shipments to the United States in retaliation for Exxon Mobil Corp.'s success in persuading courts in the U.S. and Europe to freeze Venezuelan assets.
"We don't have plans to stop sending oil to the United States," Chavez said during a visit to heavy-oil projects in Venezuela's petroleum-rich Orinoco River basin that were nationalized last year.
But if the United States "attacks Venezuela or tries to harm us, we will have to make the decision not to send a single drop of our oil to the United States," he added.
U.S. officials have denied planning to attack Venezuela.
Chavez's administration — a close ally of Cuban leader Fidel Castro — is locked in a legal battle with the Irving-based oil company over compensation for nationalization of one of four heavy-oil projects in the Orinoco River basin.
Exxon Mobil — the world's largest publicly traded oil company — wants to freeze billions of dollars in Venezuelan assets in the United States and Europe to guarantee a payoff in the event it wins a decision by an international arbitration panel.
The United States relies on Venezuela for about 10 percent of its oil imports.

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Venezuela paying italian company over oilfield takeover

Venezuela paying Italian company over oilfield takeover

CARACAS, Venezuela (Reuters) — Venezuela has agreed to pay Italy's Eni $700 million in cash for the takeover of an oil field but hardened its stance in a fierce compensation battle with ExxonMobil (XOM).
Oil Minister Rafael Ramirez said Tuesday that the government would make the payment to Eni for the Dacion heavy crude project over a seven-year period.
"The book value of the investments made by the transnational company in the Dacion field are $700 million and we have agreed to pay it over seven years," he said.
He said the agreement left Exxon isolated as the only company fighting with the government over a drive to increase state control of Venezuela's huge oil resources.
Exxon in recent weeks won court orders freezing up to $12 billion of Venezuela's assets, prompting state oil company PDVSA to sever commercial ties with America's biggest company.
Ramirez warned that Venezuela could pull out of its Chalmette, La., refinery joint venture with the Texas company over the dispute. He said the fight with Exxon was one factor helping support world oil prices.
Venezuela took over the Eni field in 2006 after negotiations with the government of socialist President Hugo Chavez to convert the Dacion subcontracting venture into a state-majority joint venture fell through.
"Eni believes this settlement represents an important step toward improving and consolidating the cooperation with local authorities and with PDVSA," the company said last week in statement.
Ramirez thanked Eni for its willingness to negotiate an agreement with Venezuela while slamming Exxon for challenging PDVSA over compensation for the nationalization last year of one of four Orinoco heavy oil projects.
"Eni never lost trust in our country," Ramirez was quoted as saying by the local Globovision television channel, which posted his comments on its website. He criticized what he called Exxon's "aggressive attitude."
Ramirez on Tuesday denied that Exxon's investments in the Orinoco region are worth billions of dollars, saying the company's "total assets in Venezuela are less than one billion dollars."
Contributing: Associated Press
Copyright 2008 Reuters Limited.

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Tuesday, February 12, 2008


Gustavo Coronel‏

**** The Venezuelan Oil industry in chaos: an unreliable supplier to the U.S.

The model chosen to nationalize the Venezuelan petroleum industry in 1976 was unique and very successful: four integrated operating companies under a financial and strategic planning holding company. Management was very professional, politics did not play a role and, as a result, Petroleos de Venezuela became, for the next 25 years, one of the top oil companies in the world, next to Exxon and Shell. This success story came to an end when Hugo Chavez came into power in 1999. During his presidency Petroleos de Venezuela has lost about 800,000 barrels per day of production capacity, and management has been politicized. U.S. based, fully owned affiliate, Citgo, has become a political tool that distributes subsidized fuel in the U.S. as part of Hugo Chavez’s strategy to establish a political beachhead in that country, with the willing assistance of Joseph Kennedy III and a few members of U.S. Congress.

Venezuela still is one of the key petroleum suppliers to the U.S., sending about 1.1 million barrels per day to that country. Any abrupt disruption of this flow of oil would result in a major blow to the U.S. economy, already in the threshold of a recession. Up to now the possibility of such a disruption had been based upon the unpredictable nature of Hugo Chavez as an authoritarian leader who hates the U.S. There is little doubt that Chavez would interrupt the flow of oil to the U.S if he could. But he cannot. Most of the oil coming to the U.S. can only be refined in U.S refineries and it would take China or India, the other two likely main clients, about five years to build refineries to process Venezuelan oil.

The danger of such an interruption is, therefore, negligible? Not really. There is another reason why this flow could be suddenly interrupted: because the Venezuelan petroleum company becomes unable to fulfill its contractual obligations due to poor management and to a major financial or operational collapse. Even two years ago this would have appeared extremely unlikely but, recently, the company has been deteriorating at an alarming rate. Under investment and lack of maintenance have combined to take production down to very low levels, no more than 2.5 million barrels per day, while domestic consumption is now reaching some 800,000 barrels per day, cutting into the volumes originally destined for exports. Some 300,000 barrels per day go at subsidized prices to Cuba, Nicaragua, Bolivia and some of the Caribbean states. Any further problems of an operational or financial nature would place PDVSA’s production below the volumes contractually committed to the U.S.
What are the chances of these problems getting worse in the near future? They are so high that the U.S. should be prepared for such an eventuality.

The Venezuelan petroleum industry is nearing financial collapse. Recent signs are ominous. The company is demanding payment of exports within eight days, rather than the traditional thirty days, suggesting that the company has a severe problem of cash flow. Some days ago the Venezuelan petroleum company ordered Citgo to obtain an urgent $1 billion loan on its behalf and a few hours ago it requested another $500 million from Citgo as advanced dividends. In a very unusual move cargoes of fuel oil, worth about one billion dollars, have been placed for sale in the spot market at a discount provided they are paid in cash. The Venezuelan petroleum company has obtained a $4 billion loan to China, to pay for debts of the central government that have no relation with the oil company. The Bahamas oil terminal, owned by Petroleos de Venezuela, has been put up for sale, without success. There is an air of panic surrounding the finances of the Venezuelan petroleum company.

But this is not all. As a result of the aggressive political moves during the last two years by Hugo Chavez, who practically confiscated large oil projects of Exxon Mobil and Conoco Phillips in Venezuela, Exxon Mobil has just decided to counter attack and has obtained court orders from the U.K., the Netherlands, the Netherlands Antilles and the U.S. to freeze up to $12 billion worth of Venezuelan oil assets in these countries. This legal action by Exxon Mobil might not impede the daily operations of the company but represents a major financial and psychological blow to the already very weakened Venezuelan petroleum company and to the government of Hugo Chavez. This action might be followed by a similar action by ConocoPhillips,another company that feels wronged by the Chavez government.

The possibility of a major collapse of the Venezuelan petroleum company and of its inability to fulfill U.S. contractual commitments increases as the days go by.

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Exxon Mobil cut off from Venezuela's oil

Exxon Mobil cut off from Venezuela's oil

CARACAS, Venezuela (AP) -- Venezuela's state oil company said Tuesday that it has stopped selling crude to Exxon Mobil Corp. in response to the U.S. oil company's drive to use the courts to seize billions of dollars in Venezuelan assets.

President Hugo Chavez has said Exxon Mobil is no longer welcome to do business in Venezuela.

Exxon Mobil is locked in a dispute over the nationalization of its oil ventures in Venezuela that has led President Hugo Chavez to threaten to cut off all Venezuelan oil supplies to the United States.

Venezuela is currently the United States' fourth largest oil supplier.

Tuesday's announcement by state-run Petroleos de Venezuela SA, or PDVSA, was limited to Exxon Mobil, which PDVSA accused of "judicial-economic harassment" for its efforts in U.S. and European courts.

PDVSA said it "has paralyzed sales of crude to Exxon Mobil" and suspended commercial relations with the Irving, Texas-based company.

"The legal actions carried out by the U.S. transnational are unnecessary ... and hostile," PDVSA said in the statement.

It said it will honor any existing contracts it has with Exxon Mobil for joint investments abroad, but reserved the right to terminate them if permitted by the terms of the contracts.

Exxon Mobil spokeswoman Margaret Ross declined to comment on the move by Venezuela but said that "it is our long-standing practice to take appropriate steps to meet our customers' needs."

Exxon Mobil is challenging the Chavez government's nationalization of one of four heavy oil projects in the Orinoco River basin, one of the world's richest oil deposits.

A British court issued an injunction last month temporarily freezing up to $12 billion of PDVSA's assets.

Other oil companies including Chevron Corp., France's Total, Britain's BP PLC and Norway's StatoilHydro ASA have negotiated deals with Venezuela to continue as minority partners in projects. ConocoPhillips and Exxon Mobil balked at the government's tougher terms and have been in compensation talks with PDVSA.

Earlier Tuesday at an energy conference in Houston, Exxon Mobil senior vice president Mark Albers declined comment on any court proceedings with Venezuela, though he said the company is eager to negotiate fair compensation for its assets. Exxon Mobil is taking the dispute to international arbitration, to which Venezuela has agreed.

Venezuela's announcement came after Ramirez, the oil minister and PDVSA president, reiterated in a newspaper interview Tuesday that Venezuela is ready to cut off oil supplies to the United States if pressed into an "economic war."

"If they want this conflict to escalate, it's going to escalate. We have a way to make this conflict escalate," Ramirez was quoted as saying.

The White House on Tuesday declined to comment on Venezuela's threat. "When there's a litigation that's ongoing, different parties will say anything to try to win over on an argument," said White House press secretary Dana Perino.

Meanwhile, Venezuelan state television has begun airing short anti-Exxon segments, with a message appearing on the screen in red text reading: "Exxon Mobil turns oil into blood."

The U.S. remains the No. 1 buyer of Venezuelan oil, and Chavez relies largely on U.S. oil money to stimulate his economy and bankroll social programs that have traditionally boosted his popularity.

Some analysts say it would make little sense for Chavez to follow through on his threats because Venezuela owns refineries in the United States that are customized to handle the South American country's heavy crude.

Ramirez said Venezuela is selling the U.S. a daily average of 1.5 million barrels of crude and other products derived from

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Friday, February 8, 2008

Court Bars Sale of billions in Oil Assets by Venezuela

We have years working against Chavez because we new he was ruining Venezuela. It is very sad to see this.
vdebater reporter
Court Bars Sale of Billions in Oil Assets by Venezuela
Published: February 8, 2008
CARACAS, Venezuela — The oil giant Exxon Mobil has won court orders freezing as much as $12 billion in petroleum assets controlled by Venezuela’s government in an escalation of a dispute over efforts by President Hugo Chávez to assert greater control over the country’s oil industry. Venezuela’s dollar-denominated bonds suffered their steepest drop in six months on Thursday on concerns that Mr. Chávez’s government could face a protracted legal battle with Exxon, preventing the government from raising cash through the sale of refineries abroad if the economy here slows after years of torrid growth.
Investors are also increasingly concerned about the financial health of the national oil company, Petróleos de Venezuela, amid reports that its debt is ballooning as its output declines. The oil company is the largest single source of revenue for Mr. Chávez’s government, financing an array of social welfare projects and foreign aid to leftist allies. “This is a big blow against Venezuela,” said Pietro Pitts, an oil analyst who publishes Latin Petroleum, an industry magazine based here. “It could set an important precedent for other multinationals threatened by Venezuela’s government.”
After Mr. Chávez’s move to take control of large oil ventures last year, Exxon dug in for a fight. While Chevron and other companies accepted the terms imposed by Mr. Chávez, Exxon aggressively sought to prevent Venezuela from transferring control of foreign-based oil assets to entities here ahead of arbitration proceedings.
In recent days, Exxon won a court order from the High Court of London prohibiting Petróleos de Venezuela from selling assets worldwide up to a value of $12 billion, Margaret Ross, an Exxon spokeswoman in Houston, said in a statement. Exxon won similar orders in the Netherlands and the Netherlands Antilles for assets worth up to $12 billion.
And in New York, Exxon won an order freezing $300 million of Petróleos de Venezuela’s assets. Despite a deterioration of political relations between Caracas and Washington, Venezuela remains a major trading partner with the United States, ranking as its fourth-largest supplier of imported crude oil. Venezuela’s government also controls Citgo Petroleum of Houston, which operates refineries in Illinois, Louisiana and Texas. Mr. Chávez’s government has compensated American companies in previous nationalizations of their assets when it was faced with the possibility of losing control of Citgo and other foreign assets in retaliation.
A spokesman for Petróleos de Venezuela did not return calls seeking comment. The company is expected to appeal the rulings. The dispute may raise borrowing costs for Petróleos de Venezuela, which is being reconfigured by Mr. Chávez to focus on pressing social concerns.

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Exxon wins freeze on $12bln of Venezuelan assests

This is terrible to Venezuela...... Thanks Chavez and his political supporters, they ruin Venezuelans wealth.... They will have to pay.
vdebate reporter
Exxon wins freeze on $12 bln of Venezuelan assets
Thu Feb 7, 2008 7:32pm EST
(Adds analyst comments, background, byline)
By Michael Erman
NEW YORK, Feb 7 (Reuters) - Exxon Mobil Corp (XOM.N: Quote, Profile, Research) has won court orders freezing up to $12 billion in Venezuelan assets around the world as it fights for compensation for operations lost to President Hugo Chavez's nationalization drive.
The largest U.S. company sought the asset freeze to guarantee repayment should it win arbitration over the Cerro Negro heavy oil project.
The move is the boldest challenge yet by an international oil major against any of the governments around the world that have moved to increase their holds on natural resources as energy and commodity prices have soared.
"To me it sounds like a very aggressive tactic," said Stephen Zamora, professor of international law at the University of Houston Law Center.
"I can't really say that I'm aware this has been used in other investment disputes. They may be trying to get the government to settle."
Exxon -- which last week posted the largest ever year's profit by a U.S. company -- said on Thursday it has received court orders in Britain, the Netherlands and the Netherlands Antilles each freezing up to $12 billion in assets of Venezuela state oil firm PDVSA. An Exxon spokeswoman said the total that could be frozen worldwide was $12 billion.
Exxon also won a court order from the U.S. District Court for the Southern District of New York in December freezing more than $300 million belonging to PDVSA, seeking to guarantee repayment should it win the arbitration.
PDVSA, one of the largest suppliers of crude oil to the United States, was not immediately available for comment. The White House and the U.S. State Department also declined to comment.
Venezuela's sovereign bonds sold off after the court orders surfaced.
Left-winger Chavez, who regularly clashes with the Bush administration, took over Exxon Mobil and ConocoPhillips (COP.N: Quote, Profile, Research) stakes in multibillion-dollar heavy oil projects in Venezuela's oil region last June.
The move was part of the left-wing leader's drive to nationalize key industries including utilities and telecommunications companies owned by private companies.
The news comes as a tough blow to Chavez, who suffered a stinging defeat in a December referendum that would have let him run indefinitely for reelection and enshrine socialism as the OPEC nation's economic system.
PDVSA is already facing growing debt and increasing operational problems that analysts attribute to underinvestment caused by the company's massive contributions to Chavez's social programs.
But the near-term effect of the Exxon legal maneuver on PDVSA's day-to-day operations was not immediately clear.
The South American nation has an extensive overseas refining network, including the Citgo refining and marketing branch in the United States.
Exxon said in court filings that recent estimates have placed PDVSA's global asset value -- including its operations in Venezuela -- at over $62 billion
PDVSA's European refining assets, principally a 50 percent share in the German refining joint venture Ruhr Oel, were held through a Netherlands Company PDV Europa BV, according to filings PDVSA made with the U.S. Securities and Exchange Commission in 2006.
Exxon filed for arbitration in September with the International Centre for Settlement of Investment Disputes.
Exxon has not specified how much it wants for the 41.7 percent stake in the Cerro Negro project, but it has said its remaining book investment in the project was about $750 million at the time the assets were expropriated.
The move underscores Exxon's reputation for toughness in dealing with foes as varied as governments and fishermen, as it has been willing to wage prolonged legal battles to defend its interests around the world.
Amy Meyers Jaffe, energy policy researcher at Rice's Baker Institute, said the case could have far-reaching implications.
"These are precedents that are going to be important for what people can and cannot do in the oil industry," she said.
ConocoPhillips spokesman William Tanner said his company "continues to discuss an amicable resolution regarding the assets that were expropriated in Venezuela."
Conoco filed for arbitration over the dispute in November.
Venezuela's benchmark global bond due 2027 lost 2.375 points in price to be bid 98.938, while total returns offered by the country's debt slipped 1.52 percent according to the JP Morgan EMBI+ index 11EMJ. (Additional reporting by Robert Campbell, Matt Daily and Matthew Robinson in New York; Anna Driver in Houston; and Brian Ellsworth in Caracas; Editing by Gary Hill)
© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
Reuters journalists are subject to the Reuters Editorial Handbook which requires fair presentation and disclosure of relevant interests.

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Thursday, August 9, 2007

A letter to Venezuelan president Hugo Chavez: On the subject of his oil handouts to Fidel Castro.

*Gustavo Coronel:
A letter to Venezuelan president Hugo Chavez:
On the subject of his oil handouts to Fidel Castro.

Mr. President:

The purpose of this letter is to let you know that your recent public declaration about Venezuela and Cuba being “one single nation” and about the 93,000 barrels of oil per day you have been delivering to Fidel Castro for about four years constitute acts of treason.

Let me tell you why:

1. Your decision to send Venezuelan oil to Fidel Castro was never properly consulted with the Venezuelan nation. Venezuelans would have rejected this handout due to our immense and unfulfilled needs. The subsidy you are giving Fidel Castro is estimated at some $2.3 billion per year. After the 15 year-life of the agreement you will have given Castro an amount of Venezuelan money that is similar to the current international financial reserves of our country. This is a gift of abnormal proportions, an act of aggression against the Venezuelan people;

2. You claim that “only lackeys of imperialism” object to these handouts. This is typical of your arrogance and the manner you deal with those who oppose your decisions. Recently you have accused the members of the Brazilian Congress and the Cardinal of Honduras, in addition to the Venezuelans who dare to dissent from your actions, of being “lackeys of the empire”. In your eyes, therefore, I will also be a lackey because I have no doubt that you are illegally giving away to Fidel Castro our national property, resources that do not belong to you but to the Venezuelan people. You will have to answer for this when your time comes;

3. The supply of oil to Fidel Castro is being done in terms that are totally adverse to the interests of the Venezuelan people. The low interests, the periods of grace, the payment in services which cannot be properly quantify constitute a fraud against the Venezuelan nation;

4. Oil, as you should know, is a non-renewable resource. It was formed in nature millions of years ago, when your political regime was not around. Giving oil away, exchanging it for political favors, bartering it for bananas, black beans Cuban bodyguards and pseudo medical staff, constitutes a criminal management of this resource. In the name of all Venezuelans I protest for this detrimental aggression against our nation;

5. You argue that the volumes of oil being given to Fidel Castro are “small”, as compared to the amounts Venezuela has supplied to the U.S. for “one hundred years”, in occasions “a gift”. Let me tell you that Venezuela has never given away its oil as you do today. It always obtained money for its exports. The money coming from oil has often been wasted by governments, but never in greater amounts than today, under your regime. The only Venezuelan president that has given oil at great subsidies to U.S. citizens is you, through a program of “oil for the poor” that already costs us over $100 million and targets U.S. communities that have an average income ten times higher than the average income of millions of Venezuelans. You do it for political propaganda, at the expense of our real national needs.

6. You say that Cuba “is already paying more than it has to” for the oil you send Castro. This is an irresponsible statement on two counts: one, you validate the irregular payments Cuba is making and, two; you open the doors to increased demands from Castro. This is double treason.

Finally you say that today “Cubans and Venezuelans are one and the same nation”. I protest against this servile assertion. We are free citizens, not slaves. We have no wish to belong to a single nation under the bloody paws of a dictator that has recruited you as heir. One thing is to feel solidarity with the peoples of the hemisphere. A different thing is to become oxen driving the wagon of Latin American despotism. All-out resistance from democracy loving Venezuelans will meet your attempts in this direction. .

*Gustavo Coronel is a 28 years oil industry veteran, a member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), author of several books. At the present Coronel is Petroleumworld associate editor and advisor on the opinion and editorial content of the site. All Coronel's articles can be read in his blog www.lasarmasdecoronel.

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Tuesday, July 24, 2007

Venezuela's energy minister says state oil company struggling with 'operational emergency'

Finally, the government admits that the state-owned oil industry has problems.

Venezuela's energy minister says state oil company struggling with 'operational emergency'
The Associated Press
Published: July 24, 2007

CARACAS, Venezuela: Venezuela's state oil company is struggling with an "operational emergency" because it has not been able to hire enough oil drilling rigs, the country's oil minister said in published remarks Tuesday.

Rafael Ramirez told the El Universal daily that Venezuela's state-run oil company, Petroleos de Venezuela SA, or PDVSA, needs to hire dozens more rigs to reach rising production targets.

"There's effectively an operational emergency and the board (of directors) determined this because if we do not accelerate the (oil rig) tender process, a situation is going to arise that could prevent production plans from being reached," Ramirez was quoted as saying.

Tuesday was a national holiday in Venezuela and oil ministry spokesmen were not available to confirm Ramirez's published comments.

Some industry watchdogs have said Venezuela's crude output is falling partly because of the rig shortage. The Paris-based International Energy Agency, which collects and analyzes statistics related to the international oil market, calculates that oil output in Venezuela — a major supplier of crude to the United States — has fallen to 2.37 million barrels a day, down from 2.6 million barrels a day a year ago.

Venezuela claims to be producing more than 3 million barrels a day.

"We hope to reach 3.2 million barrels by the end of the year," Ramirez said.

Venezuela has traditionally hired rigs from foreign companies, including the U.S.-based firms Halliburton Co. and Schlumberger Ltd, but the oil-rich South American nation is gradually moving to take complete control over rig operations.

It has struck a deal with China National Petroleum Corp. to begin assembling drilling rigs in Venezuela, a major part of PDVSA's plan to gain its own rig fleet. Production of the rigs is expected to begin within two years.

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Thursday, July 19, 2007

Fleeing Chávez, Veteran Oil Workers Flock to Frigid Alberta

Sad!. Many Venezuelans professionals leave our country because of the Venezuelan government hostility. Nice! that these Venezuelans are doing well in Canada!
vdebate reporter

Fleeing Chávez, Veteran OilWorkers Flock to Frigid Alberta
By Joel Millman
From The Wall Street Journal Online
Before he left Venezuela in April for this petroleum outpost in northern Alberta, Freddy Mendez heard tales about bone-chilling winter cold and lumbering moose. Since he's come to town, he's seen two black bears in his neighborhood. Still, the toughest adjustment is the late-night sun. "You get a lot of work done when the sun doesn't set until 11," he says, stifling a yawn. "But it's so hard getting the kids to bed."
The 45-year-old engineer is part of a swelling colony of Venezuelan expats who say they were driven into exile by a hostile government. Many assert they were purged after a long strike in 2002 at Petróleos de Venezuela SA, the state-owned oil giant known as PdVSA. More recent arrivals initially found work with private oil companies operating in Venezuela in 2003, but lost their jobs this year when Hugo Chávez wrested control of the companies' holdings. They call themselves the "twice fired."
Frigid, remote Alberta has become one of the world's fastest growing enclaves of Venezuelans, rivaling such warm-weather spots as Weston, Fla., outside Miami; and Sugar Land, Texas, near Houston. There are now 3,000 Venezuelan-Albertan families, up from 800 or so last year. Some Albertans now call Evergreen, a Calgary housing development, "Vene-green" because of the 100 families who have bought split-level homes there, and dangle Venezuelan flags from car rearview mirrors.
The new arrivals are hardly huddled masses. Many are oil-field veterans who have taken positions in Canadian refineries at salaries topping $100,000 a year. Canadian bosses prize the Venezuelans' ability to apply techniques pioneered in South America, where oil deposits in Venezuela's Orinoco region are mined much like Alberta's gooey oil sands.
Other Venezuelans followed their relatives to Canada and found opportunities, including Orlando Morante, who opened a Calgary nightclub, the Conga Room. This past winter, a Venezuelan-born karate instructor led Calgary's delegation to an international martial-arts competition in Tokyo. The new arrivals are frequently bilingual and usually arrive with enough cash to buy into the booming real-estate markets of Calgary and Edmonton.
The loss of so many skilled oil workers has hit PdVSA hard.
Since Mr. Chávez took power in 1999, Venezuela's oil production -- according to U.S. government statistics -- is down to 2.4 million barrels a day, from 3.1 million barrels a day, despite high prices. (Venezuela has consistently accused the U.S. of undercounting PdVSA's production in recent years.)
Alberta's Gain
Venezuela's loss is Alberta's gain. With the province's oil industry perpetually short of skilled labor, Canadian companies recruit overseas professionals. Champion Technologies of Calgary, which has a unit drilling in Venezuela's Orinoco oil region, brought employees north. So did the oil-sands giant, Suncor Energy Inc., which has nearly 100 Venezuelan professionals on its payroll. Jacobs Canada Inc., the local unit of the U.S. engineering company, has sent teams of headhunters to Caracas to conduct interviews, returning with dozens of PdVSA veterans.

After Pedro Pereira lost his job directing Venezuela's petroleum technology center following the 2002 PdVSA strike, he fielded offers to return to the Lawrence Livermore National Laboratory in California, where he had been a research fellow in the 1980s.
But he chose the University of Calgary. Over the past five years, he's received $5 million from the Alberta Ingenuity Fund, a provincial program for scientific ventures, to develop advanced methods of extracting bitumen from oil-sand deposits. Canada's liberal immigration rules also let him recruit colleagues, and Canadian firms often hired the spouses of academics he hired, increasing family salaries.
Remote Fort McMurray, 476 miles north of Calgary, is the easiest entry point for oil families looking for a Canadian haven. There are plenty of unfilled jobs. When oil-sands development began in 1967, the town had just 4,000 people and few paved streets. Now it has 65,000 residents, including 200 Venezuelan families, up from 30 a year ago. Suburban housing developments sprawl toward the heavily forested hills that hug the banks of the Athabasca River.
The Venezuelans do their best to hold on to their home culture, importing chili peppers, which they cultivate in pots set under heat lamps, and making traditional cachapa pancakes with Canadian corn meal, which is much finer than the coarse flour used at home.
The men fill their weekends by playing softball in neighborhood parks where hockey has ruled. Some wear caps and shirts emblazoned with the logo "Gente de Petróleo," or "Petroleum People," the civic organization led by PdVSA managers opposed to the Chávez regime.
St. John's, Fort McMurray's local Catholic parish, now conducts a Spanish-language mass every month. New immigrants from Venezuela pitch in to help the Rev. Gerard Gautier with the liturgy. "They keep saying to me, 'You're doing good, just watch those mispronunciations,'" the cheery Canadian priest says.
Biggest Contribution
Locals say that salsa music may be the Venezuelans' biggest contribution to Fort McMurray's quality of life. Fed up with sunless days, frozen car engines and husbands gone for long shifts at the oil refinery, two winters ago Marifé Valderrama launched Baile Terápia -- Dance Therapy -- in her basement. Wearing tropical spandex outfits and other exercise gear, she and her ladies dance for hours to cumbia, merengue and reggaetón beats. Word spread, and soon natives clamored to join.
Ms. Valderrama, a 31-year-old chemist and former professional dancer, has moved Baile Terápia to the cafeteria at Father Mercredi High School, where she has branched into couples' classes and mommy-and-baby salsa groups. She does salsa consulting on the side.
"I charged $80 to do a bachelorette party for 15 Canadian women," she says. "The wedding was in the Dominican Republic and they wanted to be able to dance when they got there."
Many Venezuelans also flock to tiny Foothills Stadium in Calgary to watch the minor-league Calgary Vipers, which has two Venezuelan ballplayers on the roster. One, outfielder Jorge Tang Jr., is a former Cincinnati Reds prospect who trained at the Reds' Venezuelan baseball academy. Mr. Tang's father is a surveyor recruited by drilling-services company Multi-Shot LLC to work in Canada.
The other, pitcher Daivis Burguillos, was a prospect of the New York Mets' organization who says he got tangled in the political strife between Caracas and Washington. "I was supposed to get a visa to join the Mets in Port St. Lucie [Fla.]," the 24-year-old Caracas native says. "Because of all the diplomatic fighting, they never got one for me. The Mets released me." (The Mets say Mr. Burguillos was cut for his performance, not due to visa problems.)
At a recent Vipers game, dozens of Venezuelan fans, dressed in bright reds, blues and yellows to match the colors of Venezuela's flag, filled seats along the right field line. "Hip, Hip! Jorge," the Venezuelans shouted in unison, echoing an ESPN TV ad, when Mr. Tang strode to the plate. He went one for four in the game and is hitting .264.
The 20-year-old Mr. Tang says he sees Venezuelan transplants at road games in Edmonton and Winnipeg: "It's like having a family here."
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