Re: [OPE] Chávez expropriates oil service companies

The nationalization of Venezuelan oil industry took place in 1975. Current decisions over concessions is a simple administrative choice abut how much risk to share in exploration and extraction of oil. Decisions that are currently taken from Statoil in Norway to Arabian Oil Company in Saudi Arabia.   To talk of nationalization in Venezuelan oil industry just revels a poor journalism which follows the empty rhetoric of Chavez.   The question is if it is rational that Venezuelan oil company deals with an increasing amount of risk in the operation of the industry.   Regards,A. Agafonow ________________________________ De: Jurriaan Bendien <adsl675281@telfort.nl> Para: Outline on Political Economy mailing list <ope@lists.csuchico.edu> Enviado: viernes, 15 de mayo, 2009 22:35:59 Asunto: [OPE] Chávez expropriates oil service companies Chávez seizures fuel Venezuela oil fears By Benedict Mander in Caracas FT May 10 2009 A fresh round of expropriations in Venezuela has raised fears that the Opec producer’s already declining oil output could sink to its lowest level in the past 20 years. Troops were mobilised over the weekend to assist Venezuela’s state-owned oil company, PDVSA, in seizing the assets of some 60 oil service companies, after a law was approved last week that paves the way for the state to take increasing control over its all-important oil industry. “To God what is God’s, and to Caesar what is Caesar’s,” said Venezuela’s President Hugo Chávez, as he presided over the expropriation of more than 30 oil terminals and some 300 boats. “Today we also say: to the people what is the people’s,” the socialist leader said to roars of approval from red-clad supporters on the shores of Lake Maracaibo, the heartland of the nation’s oil production. This move forms part of a broader assault against the private sector, which Mr Chávez has increasingly blamed as Venezuela slides into recession. Simultaneously he is engaging in what opposition leaders say is a campaign of persecution of his political foes. Manuel Rosales, a former presidential candidate, has been granted asylum in Peru to escape arrest over corruption charges, while congress has removed almost all the spending powers of Antonio Ledezma, the anti-Chávez mayor of Caracas. Other opponents have been jailed or gone into hiding. PDVSA, which is suffering from a sharp fall in export income, made the surprise move against the oil service companies in response to their threat that they would suspend operations until it paid a backlog of invoices. Some, including Helmerich & Payne and Ensco International, abandoned rigs this year. PDVSA, which is under pressure to cut expenses by 60 per cent because of tumbling revenues, is estimated to owe as much as $12bn (8.9bn euro, 7.9bn pounds) to contractors since suspending payments to them last August, shortly after oil prices began their precipitous decline. It has demanded that companies accept a 40 per cent cut in their bills, arguing that the decline in oil prices means they are charging too much. The new law will also enable PDVSA to pay debts with bonds rather than cash, and compensate assets at book value. The move is the latest sign of the deepening cashflow crisis that has bedeviled the state oil company for at least two years as it has become overburdened with responsibilities far removed from its core business – in particular funding and running the massive social programmes that have become the bedrock of Mr Chávez’s support. But analysts say that by shifting its problems onto its suppliers, PDVSA is storing up even bigger problems for the future. Not only does it lack the ability to operate as efficiently as the service providers, but it sends a grim signal to companies considering investing in Venezuela. Consequently, future oil production is under threat. (...) Complete: http://www.ft.com/cms/s/0/b332e432-3d54-11de-a85e-00144feabdc0.html?nclick_check=1 E-mail message checked by Spyware Doctor (6.0.0.362) Database version: 5.10260 http://www.pctools.com/uk/spyware-doctor-antivirus/ _______________________________________________ ope mailing list ope@lists.csuchico.edu https://lists.csuchico.edu/mailman/listinfo/ope

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Received on Sat May 16 04:32:25 2009