Hugo Chávez Tightens Grip on Multinational Oil Firms
Source: The Christian Science Monitor
Hugo Chávez is showing little mercy to multinational companies doing business in Venezuela, by demanding a 60 percent stake in oil companies with projects there.
Tense relations between private firms and Mr. Chávez's government escalated last week when the government seized fields operated by two European oil giants - France's Total and Italy's ENI - after the two companies snubbed government demands to convert their contracts to joint ventures with the state by April 1.
"This country does not allow itself to be blackmailed," says energy minister Rafael Ramirez. "These two multinational companies resist adjusting to our law. Our sovereignty isn't under negotiation."
"This country does not allow itself to be blackmailed," says energy minister Rafael Ramirez. "These two multinational companies resist adjusting to our law. Our sovereignty isn't under negotiation."
Translation: If an oil company wants to do business in Hugo Chávez's Venezuela, they must take the state as a partner with a 60/40 split (see below) in favor of the state.
Sixteen companies - including Chevron and Shell - did agree to new terms giving state oil company PDVSA at least a 60 percent state stake, a success which analysts say could embolden Venezuela to demand a majority stake in more valuable projects in the country's Orinoco heavy-oil belt. Heavy oil's viscosity makes it more expensive to drill and refine than regular oil. However, high oil prices have attracted top companies to Venezuela's heavy oil, which could boost the country's reserves count to the largest in the world - ahead of Saudi Arabia.
So who is really blackmailing who in oil rich Venezuela?