Reply #34: something I came across... [View All]

http://www.globalpolicy.org/empire/challenges/general/2007/0410oilshowdown.htm


Oil Showdown Looms with Venezuela's Chavez
By Simon Romero and Clifford Krauss
International Herald Tribune
April 10, 2007

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As Chávez asserts much greater control over Venezuela's oil industry, his national oil company, Petróleos de Venezuela, is showing signs of stress. Management has become increasingly politicized, and money for maintenance and development is being diverted to pay for a surge in public spending. During the last several decades, control of global oil reserves has steadily passed from private companies to national oil companies like Petróleos de Venezuela. According to a new Rice University study, 77 percent of the world's 1.148 trillion barrels of proven reserves is in the hands of the national companies; 14 of the top 20 oil-producing companies are state-controlled.

The implications are potentially stark for the United States, which imports 60 percent of its oil. State companies tend to be far less efficient and innovative, and far more politicized. No place captures the shift in power to nationalist governments like Venezuela. "We are on a collision course with Chávez over oil," said Michael Economides, an oil consultant in Houston who wrote an influential essay comparing Chávez's populist appeal in Latin America with the pan-Arabism of Muammar el-Qaddafi of Libya two decades ago. "Chávez poses a much bigger threat to America's energy security than Saddam Hussein ever did."
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Last week, Rafael Ramírez, Venezuela's energy minister, sent a chilling signal to the oil companies, saying Venezuela might sell refineries in Texas and Louisiana that process crude from Exxon's Venezuelan oil fields. Analysts say Venezuela could be setting the stage to produce much less oil in ventures with American oil companies for export to the United States......................................

But Chávez is chipping away at those ties by forming ventures with state oil companies from China, Iran, India and Brazil. Venezuelan exports of oil and refined products to the United States fell 8.2 percent to a 12-year low in 2006 of about 1.3 million barrels a day, according to the Energy Information Administration. No one sees an immediate crisis at Petróleos de Venezuela. But its windfall of high oil prices masks the complexity and rising costs of producing heavy oil. Meanwhile, the company acknowledged last month that spending on "social development" almost doubled in 2006, to $13.3 billion, while its spending on exploration badly trailed its global peers. And Petróleos de Venezuela's work force has soared 29 percent since 2001, even as production declined.

Independent analysts are alarmed by an increase in explosions and refining accidents during the last two years, which authorities brush off as sabotage. Ramírez, the energy minister, declined repeated requests for an interview. With heavily subsidized domestic oil consumption surging, the government spends an estimated $9 billion to keep gasoline prices under 20 cents a gallon. Moreover, Chávez uses Petróleos de Venezuela to finance other nationalizations, like a $739 million purchase of an electric utility in Caracas.
http://www.globalpolicy.org/empire/challenges/general/2...