RSS 2.0 FeedOver/Under on Nationalization?
by Brad WarbianyIf I were you, I’d worry about putting money in Repsol’s stock. They’re making a deal with Chavez, under the assumption that he’ll actually honor it! That’s not a way to look after your stockholders…
CARACAS, Venezuela (AP) — Venezuela has awarded Spanish-Argentine company Repsol YPF and Japan’s Teikoku Oil Co. 20-year licenses to explore for and produce natural gas, the state oil company said on its Web site Thursday.
Repsol will take a 60 percent stake in a joint venture with state oil company Petroleos de Venezuela SA, or PDVSA, to exploit the Quiriquire Deep gas field, which has the potential to produce 280 million cubic feet a day of gas, PDVSA said.
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President Hugo Chavez’s government has taken control of most of the oil industry in an effort to bring greater benefits to the country’s poor, and vowed to make similar moves in the gas sector.
PDVSA, however, has downplayed those comments and continued to award majority stakes in natural gas projects to private companies.
So what do you think the over/under is on the day that Chavez nationalizes these ventures? I’d guess it will be about 10 minutes after they start producing…
I’m divesting from all REPSOL stocks and mutuals. Repsol’s dancing with Chavez is silly and asanine. WHile the ’20 year License’ may sound attractive, one should only look at the massive nationalisation against once-independent oil operations now under Chavez’ PDVSA control. When LNG is found in Quiriquire, it is assuredly only a matter of time that Chavez will recind Repsol’s contract and nationalize the project as he has already done with Exxon, Chevron, Statoil, and Conoco.
My suggestion is to sell your Repsol stock immediately. This company is not worth the risk -especially in Venezuela’s current anti-business environment.
Too, any private businesses in Venezuela are becoming govenment takeover targets. If the businesses don’t divest or leave soon, their shareholders are in for an inevitable world of hurt.
Chavez’s new currency limitations make it very difficult to export hard currency out of Venezuela. With growing inflation and Venezuela pegging the Bolivar to false rates (currently at $1 = 2,700 Vblv.) while the Bolivar is trading at well over 4,000 in the black market is testament to the oncoming financial crash.
Investors have seen this train wreck before. Now is a good time for anyone to pull out while you have money to do so…
Comment by SA Bradford — March 9, 2007 @ 11:55 am