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Chavez seizures fuel Venezuela oil fears
 questionable just when Hoogo switches from pathetic clown to WOT material, but it's coming soonA 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 Chavez, as he presided over the expropriation of at least a dozen rigs, 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 Chavez 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-Chavez 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, £7.9bn) 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 Chavez'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. Perhaps most worrying is the impact this could have on foreign companies' interest in a major auction currently underway to develop the Carabobo block in the oil-rich Orinoco Belt, which is the first oil investment opportunity in Venezuela in the last decade, and represents the oil dependent country's biggest hope for reviving sagging production. According to the IEA, production fell to 2.36m bpd in 2008, compared to 3.18m bpd in 1997, although PDVSA claims it actually increased to 3.27m bpd in 2008. you can't get blood from a turnip, but you can beat it from opposition heads, Fidel Jr. knows...He needs a lead headache Posted by: Frank G 2009-05-11 |
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