Chaves will strip Operational Control from big oil companies in a move to further nationalize Venezuelan resources. This announcement came exactly a year afer Chavez's leftist ally Bolivian president Evo Morales ordered his army to seize gas fields, a move which startled investors.
Projects in the Orinoco Belt are worth $30 billion, and can convert to 600 000 barrels per day.
Oil companies from the US, (Exon, Chevron, and Conoco Phillips), have all decided to obey this decree to transfer operational control over to the State.
Tuesday, May 1, 2007
Hugo Chavez Seeks to Stip Big Oil Companies
Posted by Soletrader at 6:28 AM
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This is going to usher in tough times for the Venezuelan economy. The first thing that Chavez did when he got into office was gut PDVSA, the Venezuelan state oil company - which was a pretty competent entity but was considered a political threat.
Ironically, Chavez's rhetoric aside, beating down PDVSA made his administration more beholden than ever to foreign oil companies.
Now, by changing the regulatory environment he's effectively ensuring that foreign companies view Venezuela as a hostile country to place their investment dollars. We'll surely see production start to decline, and if that's coupled w/ falling global oil prices then the Venezuelan economy will be headed for the rocks.
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