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Venezuela seeks investments from Big Oil
(Agencies)
Updated: 2009-01-16 09:06 CABIMAS, Venezuela -- Squeezed by slumping crude prices, Venezuela is reaching out to the multinational oil companies it once demonized as imperialist profiteers.
Venezuela is soliciting bids from the world's major oil companies to extract heavy crude from vast deposits in its Orinoco River region. Despite President Hugo Chavez's criticism of US-style capitalism, it has become clear that state-owned Petroleos de Venezuela SA needs both the cash and expertise of Big Oil. These international oil companies have made windfall profits in recent years, but analysts doubt many will want to invest again given Chavez's history of seizing foreign stakes in Venezuela's oil. "When it comes to Venezuela, there's still going to be a lot of skepticism," said Greg Priddy, a global oil analyst at the Eurasia Group in Washington D.C. "Chavez is still there and you haven't had a change in government."
But times have changed since Chavez nationalized Venezuela's last privately run oil fields in Orinoco in May 2007, shouting "Down with the US empire!" as Russian-made fighter jets streaked overhead. The government took majority control of those projects, siphoning off more of the profits and reducing private companies to minority partners. Exxon Mobil Corp. and ConocoPhillips pulled out altogether, while Chevron Corp. and others begrudgingly accepted the new terms. Venezuela's oil industry has stagnated under Chavez. Thousands of veteran employees with critical expertise were fired for backing an oil strike in an attempt to oust Chavez from office, even as the payroll expanded by more than half since 2002 to 70,400. Chavez has turned PDVSA into an all-purpose social service agency. An urban development arm builds houses, and a subsidiary sells milk, chicken and beans at metro stations and plazas. Chavez even gave PDVSA the task of training Venezuela's Olympic team. The neglect of the company's core business is evident along the eastern shore of Lake Maracaibo, where for every few pump jacks pulling crude, another one hovers motionless above an abandoned well. Here in the petroleum heartland — home to 78 billion barrels of Venezuela's most accessible reserves — machinery lies broken amid the weeds along muddy lakeside roads. Steam hisses from rusted pipes. PDVSA insists output is steady at an average 3.3 million barrels a day. But according to the Organization of the Petroleum Exporting Countries, to which Venezuela belongs, production has dropped 16 percent since Chavez won office in 1998 and averaged 2.4 million barrels a day last year. |
