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28

Venezuela Feels Pressure of Globalization

Storage tanks brim with petroleum products, a network of pipelines hum with crude, and tankers load at the rate of 18,000 barrels an hour. President Hugo Chávez, a leftist populist who has cast himself as one of the world's leading voices against globalization, celebrates installations like this oil refinery as a national patrimony beholden only to Venezuela's 25 million people.

Storage tanks brim with petroleum products, a network of pipelines hum with crude, and tankers load at the rate of 18,000 barrels an hour. President Hugo Chávez, a leftist populist who has cast himself as one of the world's leading voices against globalization, celebrates installations like this oil refinery as a national patrimony beholden only to Venezuela's 25 million people. But the fact is that the oil that flows through here is pumped largely by foreign companies, many of them American, including Exxon Mobil, ChevronTexaco and ConocoPhillips, and the tankers are bound for the United States. Moreover, if the government's long-range plans take hold, the world's biggest energy companies will increasingly be the ones paying for the extraction of fossil fuels in this energy-rich country.

Chávez's government has apparently succumbed to reality: The government oil company, Petróleos de Venezuela, battered a year ago by an anti-Chávez strike, simply does not have the capital to go it alone. So despite the image Chávez has cultivated in his five years as president, the government is aggressively seeking foreign investors to expand oil production and develop the emerging natural gas industry.

The policy, outlined in public documents and in interviews with oil company executives, has irritated some of the president's more leftist backers while apparently veering Venezuela back to the course it pursued years before he took office. "For all its rhetoric, the truth is that this government has treated investors with preferential treatment, and has been careful not to alienate investors too much," said Rafael de la Fuente, chief Latin America economist for BNP Paribas in New York. "So you've had this ironic situation where Chávez has been knocking on foreign investors' doors and telling them: 'Come to Venezuela.'"

Indeed, oil activity by PDVSA, as the $42 billion government oil giant is known, declined 12.2 percent in the third quarter compared with the third quarter of 2002, according to Venezuela's central bank, while private oil industry activity shot up 30.2 percent. State oil export volumes fell 27.4 percent in the period, but exports by private oil companies, including American ones, rose 37.7 percent, according to balance of payments data released by the bank.

In all, more than a third of the oil produced in Venezuela is produced by private companies, about a million barrels daily, up from 400,000 before Chávez became president.

The emphasis on multinationals may come as a surprise to many people around the world, given Chávez's harsh criticisms of globalization and of Washington's initiatives for a hemispherewide trade agreement. South American countries must take more control of their fossil fuels, he says, possibly forming a continentwide energy company.

In Venezuela, the government's oil policy is seen as pragmatic, aimed at obtaining capital to help PDVSA grow while providing the revenues needed to finance the government's antipoverty efforts.

"In a country with a big debt, in a country that needs lots of social investments, it is obvious that we are open to associating ourselves with the people who can bring the capital," said Nelson Martínez, who oversees PDVSA's operations in the eastern part of the country.

Ever since a two-month oil strike that shuttered oil production ended in February, PDVSA has been working to assure investors that the country is stable and that its most important company is back to normal. Chávez's government fired 18,000 striking workers and slowly restored production to prestrike levels, more than three million barrels a day, while increasing the role the Energy and Mines Ministry plays in making important decisions, PDVSA officials say.

Some industry and financial experts say that daily output figure is inflated.

Venezuelan oil officials have organized a conference for oil executives in Houston, met with Wall Street analysts and had breakfast in Washington with members of Congress from oil-producing states. "It's been a huge public relations offensive for the last year," said David Voght, managing director of IPD Latin America, a consultant to oil companies operating in Venezuela. "There's a higher level of interest by investors in Venezuela because the government has just been out there drumming up business."

In the vast fields south of here, Exxon Mobil, ChevronTexaco, ConocoPhillips, Statoil of Norway and Total of France already operate ventures with PDVSA.

The crude in those fields, spread across a flat landscape of grasslands known as the Orinoco Belt, is heavy and gelatinous, and thus highly expensive to extract and refine. But there is so much of it - oil officials claim hopefully that there is more than in all of Saudi Arabia - that PDVSA is expecting these multinationals and others to expand operations.

Meanwhile, Venezuela is moving to finish auctioning offshore blocks to companies to develop the country's 147 trillion cubic feet, or 4.16 trillion cubic meters, of natural gas, by far the largest estimated reserves in Latin America. Statoil and ChevronTexaco already have won licenses to explore two of the five blocks that make up the Deltana Platform project near Trinidad's maritime border, off the eastern coast of Venezuela.

In all, PDVSA says it needs to invest $36 billion from now until 2008 to reach a production capacity of 4.4 million barrels of oil a day and to develop Venezuela's gas fields, according to filings with the U.S. Securities and Exchange Commission.

Author: Sam Maxwell

Source : Neftegaz.ru