April 05, 2006


Make no mistake, this is another major hit in the opening salvos of the Energy Wars (they don't actually NEED to be wars, of course, but that's how it's shaping up).

From a Carlyle Group sort of perspective, Hugo Chavez has just been a very naughty boy:
VENEZUELA has taken control of two oil fields operated by Eni and Total, the Italian and French energy companies, cranking up tensions with multinationals operating in the world's fifth-largest oil exporter.

Energy Minister Rafael Ramirez said the Government had taken over the operations at the weekend because the two companies had failed to meet an April 1 deadline to comply with new legislation.

In recent weeks, foreign energy companies have been required to convert 32 operating contracts into joint ventures in which the state-owned oil company, Petroleos de Venezuela, or Pdvsa, holds a majority stake. President Hugo Chavez has said the move is an integral part of a policy to secure "sovereignty" over Venezuela's oil reserves, which the Government says are the largest in the world...

Oil experts said it was too early to tell whether the development signalled the onset of a marked deterioration in Venezuela's relations with private oil companies or tougher public posturing as a way of securing better terms.

"What's not yet clear is whether this is a declaration of war or simply the next move in a game of poker," said Luis Pacheco, a former head of planning at Pdvsa.
If you do not understand the implications of that, you have not been paying attention! Read my full blog as penance...!

It is worth noting how this story is being reported within the first 24 hours:

Here is the BBC report:
So far, 16 oil firms have agreed to change their operations into joint ventures with state oil firm PDVSA.

US based Chevron, Royal Dutch Shell and Spain's Repsol are among the companies that signed the agreement on Friday...

Last year, Mr Chavez declared 32 oil exploration deals in the country illegal - prompting the change to the contracts.

PDVSA officials had voiced fears that the previous agreements were disguised attempts to privatise the country's oil industry.

However, some oil firms have refused to sign new deals, arguing that they have pumped millions into operations in Venezuela, and now may not see any return on their investment.
Here is the Reuters report:
Diplomats from Venezuela and the United States held their highest-level meeting in years on Tuesday to try to ease tensions between the energy-hungry superpower and one of its major oil suppliers...

It was the first time such high-ranking diplomats had met since President George W. Bush came to power in 2001, she [Venezuelan Deputy Foreign Minister Mari Pili Hernandez] said.

The U.S.-Venezuelan relationship has caused anxiety in oil markets, adding to general supply concerns that have helped drive world crude prices higher.

Despite threats to stop selling crude to the United States and redirect shipments to China, Chavez, a leftist who is an ally of Cuban President Fidel Castro, has been a reliable U.S. supplier of oil since he first won office in 1998.
And here is the Moonie Times account 10 minutes ago:
Allying himself with countries that share his dislike of the United States is nothing new for the oil-rich Mr. Chavez and his brand of authoritarianism, but any movement toward a joint nuclear effort with Iran is alarming.
See the resemblance??? No???

Then there's this from The Conservative Voice.

Thus does Afghanistan morph into Iraq, which morphs into Iran, which morphs into Venezuela...

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