Chávez Needs Cash — FAST!by Brad Warbiany
Back in October, I posted on a little problem appearing in Venezuela. The government’s spending requires very high oil prices to keep the books balanced, and $40 oil is not exactly close to that target.
So what does Venezuela need? Quick money:
President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again.
Until recently, Mr. Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases.
But faced with the plunge in prices and a decline in domestic production, senior officials have begun soliciting bids from some of the largest Western oil companies in recent weeks — including Chevron, Royal Dutch/Shell and Total of France — promising them access to some of the world’s largest petroleum reserves, according to energy executives and industry consultants here.
Their willingness to even consider investing in Venezuela reflects the scarcity of projects open to foreign companies in other top oil nations, particularly in the Middle East.
First, he’s going to auction off the fields. Then, the companies who actually have technology will develop them. Finally, when prices have risen and he’s feeling saucy, he’ll re-nationalize them.
Any oil company that trusts Chávez, at this late date, won’t get much sympathy from me when he changes course again.