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ft: Venezuela buys Russian oil to avoid defaulting on deals
"What goes around comes around" from same oil trader as before this analysis...Well Chavez is now buying Russian oil to avoid defaulting on its sales deals. How come? Venezuela, the world's fifth-largest oil exporter, has struck a $2bn deal to buy about 100,000 barrels a day of crude oil from Russia until the end of the year. Venezuela has been forced to turn to an outside source to avoid defaulting on contracts with "clients" and "third parties" as it faces a shortfall in production, according to a person familiar with the deal. Venezuela could incur penalties if it fails to meet its supply contracts. But why the shortfall? Under President Hugo Chávez, PDVSA's oil output has declined by about 60 per cent, a trend analysts say has accelerated in the past year because of poor technical management. Mr Chávez's push to extend his influence throughout Latin America and the Caribbean with promises of cheap oil for friends and allies may be overstretching PDVSA's finances, however. Venezuela currently supplies about 300,000 barrels per day of oil and products to Cuba, Nicaragua and others under favourable long-term financing arrangements. This week, Venezuela signed a deal to send oil to town mayors in Nicaragua aligned with the leftwing Sandinista party. So, Venezualans are billions worse off as Chavez plays his childish games to "battle" against the imagined enemy we see in these forums from time to time, a global capitalist conspiracy. The truth however is simply that Chavez has given away the nations wealth on a massive scale. The global fungible oil market, along with OPEC, the most successful producer cartel in the world, serves the interests of the citizens of producers best. Unlike super-Chav it maximises the value of oil reserves for their owners. The great game is over. The new game is globalisation of all the other areas of economic activity. The oil market globalised in 1972. Posted by: 3dc 2006-04-28 |
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