Friday, July 24, 2009

Labor tension up at Venezuela oil company PDVSA

Labor tension up at Venezuelan oil company PDVSA
Thu Jul 23, 2009
By Marianna Parraga - Analysis

CARACAS (Reuters) - Rising dissatisfaction at Venezuela's state-owned oil company over contract negotiations and alleged meddling from the socialist government could generate isolated industrial action in the OPEC country.

Nearly 100,000 workers employed by Petroleos de Venezuela, or PDVSA, and some of its contractors are upset because of overdue pay, delays in renegotiating a new contract and bullying by the government, dissident union leaders say.

The situation has been made worse by the difficulty of incorporating thousands of workers from oil service companies that were nationalized in recent months.

"If this situation continues, workers will no longer complain to the unions and there will be an explosion of the conflict," said Bernardino Chirinos of the Oil Workers' Union of Zulia, the oil-rich western state.

"Workers are ready to take action. We're at the doorstep of a strike," said Chirinos.

PDVSA says it has added to its payroll 6,500 workers and plans to add another 1,600 from previously private companies in the western Zulia state. But many part-time workers also want a staff position and have protested.

Since former paratrooper Hugo Chavez was elected president over a decade ago, he has vastly increased government intervention in the economy, nationalizing power, telephone, steel and cement companies. He also implemented currency and price controls.

Chavez fired about 20,000 workers after a crippling shutdown of the oil industry at the end of 2002 aimed at toppling his government.


Critics say efforts by Energy Minister Rafael Ramirez to consolidate all unions under a pro-government, socialist banner within the oil workers' federation FUTPV is fueling resentment among some leaders.

Last week Ramirez said he wouldn't sit down to negotiate a new contract with enemies of Chavez, in reference to unionists that side with more market-friendly opposition politicians.

The dispute among more than 100 unions over the FUTPV has delayed the renewal of a collective contract by more than six months, upsetting workers eager to get a pay raise in a country with inflation expected to top 30 percent this year.

Seven of the eleven candidates bidding for the top job of the FUTPV are considered pro-government.

Some unionists say elections have intentionally been delayed so that pro-government groups can join forces under the auspices of the United Socialist Party of Venezuela (PSUV) created by Chavez to defeat the opposition candidates.

Ramirez said the FUTPV needed to be in hands of a revolutionary in line with the country's socialist agenda.
Public sector workers in Venezuela often say they are obliged to attend pro-government rallies and active dissidents are excluded from government jobs.

Opposition-linked unionists say PDVSA, which has been struggling to pay creditors since the oil price fell sharply from last year's highs, is also short-changing workers, especially on overtime pay.

They are now putting pressure on PDVSA to pay up.

"If we win the election, PDVSA will have 72 hours to live up to its obligations," said Jose Bodas, a unionist bidding for a post on the FUTPV board of directors.

"If not, we'll register a protest with the Labor Ministry and exercise our right to strike."

(Writing by Raymond Colitt; Editing by Christian Wiessner)

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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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Friday, February 15, 2008

It would be the worst time politically for Chavez to cut oil shipments to US

"It would be the worst time politically for Chavez to cut oil shipments to the U.S.," said Patrick Esteruelas, Latin America analyst at the Eurasia Group in New York.
Oil analysts dismiss threat by Chavez on sales to U.S.
Dan Caterinicchia
Associated Press
Feb. 12, 2008 12:00 AM
WASHINGTON - Venezuelan President Hugo Chavez's latest threat to cut off oil sales to the U.S. produces tantalizing headlines and rattles some oil
traders' nerves.But analysts say it presents no long-term danger to global oil supplies or prices and makes no economic or political sense for his own country.Chavez's threat was in retaliation to Exxon Mobil Corp.'s efforts in U.S. and British courts to freeze billions of dollars of assets belonging to Venezuela's state oil company to resolve an oil-production contract dispute.

"If you end up freezing (Venezuelan assets) and it harms us, we're going to harm you," Chavez said Sunday. "Do you know how? We aren't going to send oil to the United States. "His comments helped stir anxiety on oil markets on Monday, sending crude futures prices up by nearly $2 a barrel. (Violence in Nigeria, refinery outages and colder weather in the U.S. also propelled prices higher.)
If Chavez actually cuts off supplies to the U.S., the impact would be mostly symbolic, said oil analyst Peter Beutel of Cameron Hanover in New Canaan, Conn. Any short-term supply disruption would dissipate as other nations make arrangements to take the Venezuelan crude and the U.S. makes up its shortfall by purchasing additional barrels from the Middle East, Africa and other regions.
"It makes no sense for Mr. Chavez to follow through on his threats" because the U.S. refining industry's plants, some of which are owned by Venezuela, are customized to handle much of Venezuela's high-sulfur crude oil, said Tom Kloza, chief oil analyst at the Oil Price Information Service in Wall, N.J. If Venezuela's crude was low in sulfur content, making it more valuable on the global market, he might have a better hand to play, Kloza said.
Indeed, the U.S. remains the No. 1 buyer of Venezuelan oil, purchasing more than 41 million barrels in November, accounting for roughly 10 percent of all crude-oil imports that month, according to the most recent Energy Department data available.
With oil prices hovering above $90 a barrel, Chavez relies largely on U.S. oil money to stimulate his economy and bankroll social programs that have traditionally boosted his popularity. Nevertheless, Chavez in December lost a vote on constitutional changes that would have let him run for re-election indefinitely."It would be the worst time politically for Chavez to cut oil shipments to the U.S.," said Patrick Esteruelas, Latin America analyst at the Eurasia Group in New York.
This isn't the first time Chavez has tried to use the oil weapon. He has repeatedly threatened to cut off shipments to the U.S. if Washington tries to oust him, but many analysts have dismissed that scenario as highly unlikely. Chavez, meanwhile, has been vague about precisely what actions by the U.S. government could constitute an attack against his government worthy of halting oil shipments.
Exxon Mobil has gone after the assets of Petroleos de Venezuela SA in U.S. and European courts as it challenges the nationalization by Chavez's government of four heavy oil projects in the Orinoco River basin, one of the world's richest oil deposits. Other oil companies including Chevron Corp., France's Total, Britain's BP PLC and Norway's Statoil Hydro ASA have negotiated deals with Venezuela to continue as minority partners in the project, but ConocoPhillips and Exxon Mobil balked at the tougher terms and have been in compensation talks with Petroleos.
It still remains unclear how much Venezuela stands to lose economically from Exxon Mobil's lawsuits in courts in New York and London.Although a British court last month issued an injunction "freezing" as much as $12 billion (euro 8.3 billion) in Venezuelan assets, initial reaction from Venezuela's top oil official suggested that Chavez's government does not expect to face much harm.
Oil Minister Rafael Ramirez said last week that the state oil company does not have "any assets in that jurisdiction that even come close to those sums."Light, sweet crude for March delivery rose $1.82 to settle at $93.59 a barrel Monday on the New York Mercantile Exchange after earlier hitting a one-month high of $94.72.
A key factor, analysts said, was that unidentified gunmen in Nigeria attacked a naval vessel that was escorting petroleum industry boats. Militant attacks have cut the African nation's oil output by nearly a quarter in the past two years.

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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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Wednesday, January 23, 2008



For those of you that aren’t Venezuelans, PDVSA is our state-owned oil company and the livelihood of our economy


*** PDVSA’s oil production is down but milk imports are up.

PDVSA’s oil production has declined by some 800,000 barrels per day during the last seven years and it will inevitably keep declining, as investments are significantly below requirements. This means that oil exports, the economic lifeline of Venezuela, have also been declining, not only because production is down but also because domestic consumption is sharply up. Meanwhile PDVSA, led by the future liberator of Bolivia, Rafael Ramirez, has opened a new division called PDVAL, PDVSA Alimentos, to import food (faster than producing it). The opening of this new division has been a major event in the State of Zulia. It is born, says Ramirez, “to solve the problems of supply of basic foods, in answer to the existing situation of hoarding, contraband and detour of products” in the country”. PDVSA is engaged, Ramirez says, in a struggle to prevent the food from going to Colombia (although for many years the food has been coming from Colombia!). PDVAL is working together with the
National Guard and has the full cooperation of the workers of the oil company, all dressed in red.

PDVSA is importing food through Bariven, an affiliate company. Bariven is fully and enthusiastically engaged in emergency imports of milk, tuna in cans, soy oil, margarine, tomato paste and other products. Their offices in the U.S., Argentina and other countries place ads in the newspapers and send letters to food exporters to ask for their offers of chicken, beef, eggs and other foodstuffs. “This is not a temporary program” says Ramirez, who is probably being trained at MAKRO, “we will continue distributing food through our network of commissary stores”.
Ramirez approaches the task with revolutionary zeal: “We will import 125,000 tons of food and will continue importing until we defeat the hoarding and the lack of supply”.

In these days Venezuela is a strange country all right. New police equipment is donated to Bolivia while our crime rate is the highest in the hemisphere. Houses are built in Cuba while Venezuelans have no homes of their own. New refineries are financed or promised for 14 countries around the world while Amuay and Cardon have fires and accidents every other month and gasoline shortages flare up in different places of the country. Top food importer Hugo Chavez claims that the FARC are a civilized political group and that the government of Alvaro Uribe wants war. PDVSA is planning to open a furniture division and has already become the biggest food distributor in the country.

Ii seems like PDVSA geologists will not be talking anymore about the Cretaceous and the Oca Fault but about the price of eggs and how many tons of milk are coming in. Production Engineers will not bother so much about pressures and temperatures and drilling muds but about margarine or about who is the real owner of ProArepa. I am happy that my geological career is over and I do not have to start talking about cassava and corn as part of my job.

PDVSA, Platanos de Venezuela S.A.? Not for me.

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Tuesday, July 24, 2007

Political Clashes Shake Venezuela’s Strained Oil Industry

Interesting comment in this article"
“The longer Venezuela’s new partners wait to negotiate with seriousness, the more vulnerable Chávez becomes,” said Roger Tissot, director for Latin America at PFC Energy, a consulting firm in Washington.
Political Clashes Shake Venezuela’s Strained Oil Industry
The New York Times
CARACAS, Venezuela, July 22
Venezuela’s national oil company is being shaken by claims of corruption and by internal dissent, indicating fissures within the institution largely responsible for financing President Hugo Chávez’s widening array of social welfare programs and foreign aid projects.The problems at the company, Petróleos de Venezuela, have been compounded by a rare acknowledgment by Rafael Ramírez, the energy minister and president of the company, that it cannot hire enough drilling rigs, raising concern over its ability to halt declines in oil production.
“Our sovereignty is at risk if we allow Petróleos de Venezuela to remain in this situation,” Luís Tascón, a pro-Chávez lawmaker, said in a telephone interview. “We cannot allow this company to remain an indecipherable black box.” Mr. Tascón has summoned Mr. Ramírez to the National Assembly to respond to accusations of corruption against senior executives.
Mr. Ramírez has emerged as a focus of criticism amid claims of illegal deals with oil-services companies on his watch. The attacks on him are viewed as part of a power struggle among Mr. Chávez’s supporters, with ideological loyalists clashing with the relatively less radical technocrats in charge of the strained oil industry.
The tension within Petróleos de Venezuela follows other feuds within political institutions under Mr. Chávez’s control that began earlier this year when several political parties in his coalition resisted his move to gather supporters into a single Socialist party.The armed forces also experienced an internal uproar after Gen. Raúl Isaías Baduel delivered a speech as he prepared to step down as defense minister this month saying that Mr. Chávez’s Socialist-inspired transformation of Venezuelan society should not be contaminated by Marxist orthodoxy.
But the depth of problems within Petróleos de Venezuela, which is responsible for about half of total government revenues and three-quarters of Venezuelan export revenues, illustrates how the feuds within Mr. Chávez’s coalition may weaken his ability to carry out his plans.
In comments that jolted global energy markets last week, Mr. Ramírez, the energy minister, acknowledged that Petróleos de Venezuela had hired 40 percent fewer drilling rigs than its target for this year, in part because of new rules requiring contractors to donate 10 percent of the value of their contracts to social welfare projects. While difficulty finding drilling rigs is not limited to Venezuela at a time of growing exploration internationally, Petróleos de Venezuela is also grappling with internal labor disputes as the company is strained by plans to create an assemblage of new subsidiaries charged with activities like farming, shipbuilding and manufacturing.
Union leaders, sensing vulnerability among senior executives and complaining that management had reneged on various employment benefits, said they were planning protests at production facilities across Venezuela this week. Work stoppages could make the company’s production difficulties more acute.
Speaking before the National Assembly last week, Luis Vierma, vice president of exploration and production at Petróleos de Venezuela, described the company as being in an “operational emergency.” A company spokesman did not respond to requests for interviews with Mr. Ramírez and Mr. Vierma.Venezuela, with some of the largest oil reserves outside the Middle East, officially claims to produce almost 3.1 million barrels of oil a day, but institutions like the International Energy Agency in Paris put output at 2.37 million barrels a day, down about 230,000 from a year ago.
Other energy analysts say output problems are potentially even more broadly troubling. The country’s oil exports fell 15 percent while overall production dropped 7 percent in the first quarter of this year, said Ramón Espinasa, a chief economist at Petróleos de Venezuela in the pre-Chávez era and now a respected consultant, citing both the difficulties with hiring rigs and a surge in domestic fuel consumption driven by subsidized prices.
Combined with lower global oil prices during part of this year, Venezuela’s income from oil exports may decline by about 24 percent in 2007, to $45.6 billion compared with $60.4 billion last year, by Mr. Espinasa’s estimate.
Part of the strain on Petróleos de Venezuela relates to Mr. Chávez’s efforts to assert greater control over the oil industry this year, following decrees by the president enabling the takeover of oil projects from companies including Exxon Mobil, ConocoPhillips and Chevron.That has raised fears that employees of those companies who have been critical of Mr. Chávez’s actions could be fired. A report last week in Tal Cual, an opposition daily newspaper, cited documents showing how Petróleos de Venezuela had evaluated the political sympathies of engineers at Sincor, a venture whose control was recently ceded to the government from Total of France and Statoil of Norway.
Several engineers deemed disloyal to Mr. Chávez were fired, according to the report.With newer oil fields in the Orinoco Belt facing high production costs and technical challenges because the oil there is high in impurities, a smooth transition to government control is needed to keep production levels from falling.“We’re finishing a complex process,” Bernardo Álvarez, Venezuela’s ambassador to the United States, said in a telephone interview, referring to the nationalizations.“We remain committed to supplying oil to the United States,” he added.
Venezuela remains one of the leading suppliers of oil to the United States, and the volume of oil bound for the United States has remained steady. Petroleum exports to the United States in April were 1.4 million barrels a day, the most recent figures available from the Department of Energy. Mr. Chávez is betting that new ventures with national oil companies from China, Iran, Vietnam and Belarus will allow Venezuela to lift production. Yet while production costs soar and uncertainty persists as to treatment of foreign investors, companies in most other countries have been hesitant to invest heavily in Venezuela.
“The longer Venezuela’s new partners wait to negotiate with seriousness, the more vulnerable Chávez becomes,” said Roger Tissot, director for Latin America at PFC Energy, a consulting firm in Washington.
So far, Mr. Chávez has not publicly intervened in Petróleos de Venezuela. Instead, he seems to be placing his faith in a recent increase in oil prices, which hit an 11-month high of $78.40 a barrel in London trading last week.
“Oil is going straight to $100; no one can stop it,” Mr. Chávez said last week during a visit to Nicaragua.

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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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