Hugo Chavez and the Venezuelan Government are striking back.
They have summoned the courage to take the offensive in reminding Chevron and nearly two dozen additional Energy Companies need to cough up $3 billion in back taxes. Venezuela is the world's fifth largest petroleum exporter, accounting for a sizeable account of OPEC's 40% share of Global Supply.
Venezuela regularly exceeded its OPEC oil production targets prior to President Chavez's December 1998 election. Since his election and until quite recently, Chavez has maintained a policy of strict adherence to OPEC quotas.
He required the PdVSA (Ministry of Energy and Petroleum) to cut production dramatically at existing fields, and reduce investment and total production capacity.
Current estimates suggest Venezuela has been producing less than its current OPEC production quota of 2.7 million bbl/d, instead holding the line at 2.35 million bbl/d in order to conserve oil resources until equitable agreements can be reached.
Venezuela presently has little interest in achieving its OPEC mandated quota @ 2.9 million bbl/d; despite all the mass media pabulum to the contrary. Chavez is first and foremost seeking reparations for previous Kleptocratic resource rape and pillage executed prior to his tenure.
In October 2004, he began raising royalty fees to an average of ~ 17% from 1%. More importantly, he began exercising currency seignorage in paying for contract services in nonconvertible Venezuelan Bolivares as opposed to U.S. Dollars; ordering well contracts to be converted into Venezuelan Government controlled joint ventures with partners taking the minority position @ 49%.
Venezuelan has the largest reserves in the Western Hemisphere.
The U.S. Majors have made overtures to the tune of $50 billion in capital investment dollars for Venezuelan fields. The reason is quite simple; Venezuela is a 100 hour tanker trip to the Gulf Coast refineries. As the fourth largest supplier of crude oil to the U.S., Venezuela remains a strategic source of vital energy to this nation.
Although Chavez's capital investment plans under joint venture appear restrictive, the fact is very few OPEC producers even allow direct foreign investment. Mexico decided the Rockefeller gringo's were a most unwelcome partner when they suggested PEMEX be sold to the highest bidder. An easy feat when printing Dollars costs damn near nothing.
Despite failed coup attempts, assassinations and failure of the economic hit men, Chavez has remained willing to send oil our way; such is the present power of the Petro Dollar and risks to the Global Economy.
Chavez presently wants to attract $10 billion in foreign direct investment from oil companies to improve economies of scale and vastly expand Venezuela's total oil output to 5 million barrels a day by 2009.
There is little doubt Chavez has very carefully observed the Yukos debacle. Russia, the world's second-largest oil exporter, has essentially nationalized oil production in taking a most precious and scarce resource out of the hands of Kleptocrats and placed them firmly within Mother Russia's control.
The Rockefellers were again rebuffed after dramatic plans to position themselves with a 17.5% stake in Yukos prior to President Putin's assumption of control under the auspices of the Rothschild's. They did, in fact, place Putin in power after the endless theft under Boris Yeltsin had created a Mafia Nation State; untenable to the austere Red Shield.
The simple fact is Oil Producers face higher royalties in order to do business in Venezuela.
And pay up, they most certainly will; at least until a successful attempt on President Chavez's life can install a more friendly regime. This effort is likely to have the desired effect, regardless of Pat Robertson's embarrassing diatribe.
What is not being said by our major media (propaganda outlets) is far more important than what is reported.
President Chavez clearly wants to expand output, but under terms which are fair to one and all. He is looking to assist the impoverished and in turn receive a fair price for Venezuela's resources.
Call him what you will, Marxist, Communist or whatever label suits you. Reality is as such, benevolence is on display; ignore this at your peril goes the warnings.
Venezuela's President is leading Latin America by example and I happen to believe the balance of Central and South American Nations States will be very quick on the uptake. The IMF & World Bank must be fuming.
Chavez has publicly stated he prefers a reduction in Venezuela's dependence on oil sales to the U.S., which accounts for about 60 percent of the nation's crude exports.
Chavez has signed agreements throughout 2004 and 2005 to boost oil sales to Argentina, Brazil, China, India, Paraguay and Uruguay. In addition, he has proposed constructing a pipeline to Pacific ports in Colombia in order to ship increasing quantities of crude to China; who has been exceptionally vocal with respect to inducing bilateral trade.
The U.S. imports 15 percent of its crude oil from Venezuela. In March of this year Chavez restated Venezuela's intent to reduce sales to the U.S. market by selling off the assets of Citgo Petroleum Corporation. Citgo is a Houston-based refinery and gas station chain that the Venezuelan PDVSA owns with 13,500 gas stations in the United States.
Our Foreign Policy clearly lacks a coherent strategy to deal with the ever changing energy arena.