Chavez Threatens US Oil Cutoff

[Newsjock]

Source: Associated Press

President Hugo Chavez on Sunday threatened to cut off oil sales to the United States if Exxon Mobil Corp. wins court judgments to seize his government's assets.

"If you end up freezing (Venezuelan assets) and it harms us, we're going to harm you," Chavez said. "Do you know how? We aren't going to send oil to the United States. Take note, Mr. Bush, Mr. Danger."

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/02/10/international/i124924S41.DTL&tsp=1

[LoZoccolo]

lol

So they'll send it somewhere else, and we'll buy it from someone else, and the price will remain the same because it's a commodity.

[daleo]

3. He can sell it all to China, then

They need a secure source of oil, if they are going to catch up to the U.S. in economic and military power. Naturally, the U.S. power structure won't mind if that Chinese oil comes from America's back yard. They have always been known to play fair, when it comes to oil.

[LoZoccolo]

4. Sure.

Then whoever was going to sell to China before Hugo did will sell to us.

Chavez's threat is empty posturing and demagoguing to his own people. He is the left-wing Bush*.

[Kolesar]

7. Refineries are designed for the oil field they are getting petroleum from

The thick Venezuelan crude is different than the paraffin rich Pennsylvania crude, the high-sulfide Saudi crude, or the sulfide-free West Texas Permian "sweet" crude.

That's my understanding of it.

Someday, the producers will do their own refining and we will be importing tankers of gasoline or diesel.

[Lone_Star_Dem]

9. This is my understanding also

Refineries are specific to their source. I know people in the biz who say they can tell by the smell around a refinery where it is getting it's crude from.

Personally, I doubt that but you never know.

[Kolesar]

31. Hydrogen sulfide smells like egg farts

"Career opportunities"

[RUMMYisFROSTED]

42. Wow!

:wow:

From outta nowhere!

[TankLV]

49. I didn't know it smelled like republicans!

learn something new every day!!!

[Arctic Dave]

47. a Little help

It's not that refineries are tailor made for the oil it refines as much as what it going to take to make the end product. Certain heavy crudes need more refining, this is true, and produce different by-products such as sulfur. But this defines more the maintenance of the refinery "turnaround" then what it can refine. What is probably meant by not being able to refine certain crudes is that once you do dial in your refining capabilities you don't what to keep changing it. The oilfields of Alaska are fairly diverse (we have more then one field producing different qualities of crude) but all of them are sent down the Trans Alaska Pipeline to be sent to whatever refinery is downstream.
Before the petroleum engineers come out to beat me down I will admit, yes, this is a very simple explanation.

[Kolesar]

48. It has been a while since I read up on it.

thanks :hi:

[wolfgangmo]

44. Wow - you do not get it.

The chinese are not going to suddenly just give up oil from another source and buy Venezuelan oil . Their needs far outstrip their sources. If Chavez sells to China, that sucking sound will be your furnace sucking on fumes.

[pampango]

55. If Chavez could sell his oil to China for more than he get selling it to the US,

he would be selling it to them now. My guess is that he is not currently selling his oil to us out of love or patriotism, but he gets a better price and/or the transportation cost is less. If China wanted his oil now, they would just offer him $5 a barrel more than we are paying for it.

[northzax]

57. it's amazing how people don't get global markets, ain't it?

oil is perfectly fungible, especially once it is refined. Venezuela does not sell oil 'to the United States' they sell oil on the global marketplace and the companies who tend to buy it own refineries in the US. Once oil leaves the initial pipeline, it is a commodity, and will be sold to whoever the highest bidder is. If that bidder is a French company that thinks it can make more selling the oil on to US firms it will. And, since the great majority of Orinico-capable refining capacity just so happens to be in the US, the oil will end up here anyway, if it is sold on the open market.

or does Chavez think that somehow markets don't apply to him (we know this already) and that he can control the end use of Venezuela's oil? Do you think he is really going to pull out of OPEC and all international marketplaces and sell his oil at a fixed cost to China? how is that good for Venezuela?

[mbperrin]

70. I guess the Energy Information Administration would be ok as a source.

Discrimination occurs in these markets, making them less than fungible.

http://www.eia.doe.gov/cabs/Venezuela/Oil.html


<snip>
One of the fastest growing destinations of Venezuelan crude oil exports has been China. In 2006, China imported about 80,000 bbl/d of oil from Venezuela, up from 39,000 bbl/d in 2005. In recent years, Venezuela has prioritized the diversification of its petroleum export destinations away from the United States, but the U.S. market will likely remain Venezuela’s most important market for the foreseeable future.

Discounted Oil Programs
Venezuela provides a sizable amount of crude oil and refined products to its regional neighbors at below-market prices and with favorable financing terms. Under the auspices of the San Jose Accord, Venezuela and Mexico provide eleven Central American and Caribbean nations (Barbados, Belize, Costa Rica, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Nicaragua, Panama and the Dominican Republic) with crude oil and products under preferential terms. Venezuela also has additional bilateral agreements with Cuba and Jamaica, sending those countries 92,000 bbl/d and 21,000 bbl/d, respectively, of crude oil and petroleum products under favorable terms.

The PetroCaribe signed in 2005, provides some 70,000 bbl/d of discounted crude oil and refined products to numerous countries in the Caribbean. PetroCaribe allows the importing countries to pay for a portion of the oil imports with long-term, low-interest loans or barter oil for other goods.

Venezuela has also targeted bilateral deals towards South America. In 2005, PdVSA signed deals with Paraguay and Uruguay to supply discounted petroleum products and work to upgrade the countries’ refineries to process Venezuelan crude varieties. In August 2005, Venezuela agreed to provide Ecuador with a temporary crude oil loan to help the country through a disruption to its production facilities.<snip>

[northzax]

73. what's the point of this article?

there is nothing about a bilateral deal with the US, right? all those deals are 'discounted' deals signed for foreign relations purposes and involving minute amounts of oil.

[mbperrin]

75. Point is,

China is already importing Venezuelan crude and refining it and expecting to get more, and that oil exports are indeed sent where the sellers wish. There is no "big Bowl 'O Oil" that everyone is free to dip into. Varying prices to varying customers under varying conditions means that the market is discriminatory, not fungible, and there is no reason to think Chavez cannot do exactly what he has said he will do.

Many on this thread are saying that oil follows the money wherever, that China can't refine, that the US is their only customer and so on. This is just meant to clear the air a bit over that. Anyone who lived through the Arab Oil Embargo in the 70s ought to know better than to say oil can't be cut to the US, resulting in huge price spikes.

Just trying to inject a few facts into a mostly content-free debate.

[Judi Lynn]

84. The current arrangement was preceded by discounted oil sales to poor countries

in Central America, etc., and to Caribbean islands in programs going back YEARS. Mexico also participated with Venezuela in selling discounted oil to struggling economies in the San Jose Accord. There has been a Caracas Accord, as well.

Glad you mentioned it. The discounted oil program to poor countries is not a recent invention which leaped to life to win political points for Hugo Chavez. It's been around a long time. There's a bonafide reason for it, which Mexico endorsed, of course, as a partner in the San Jose Accord.

[The Croquist]

79. He is selling some to China now but the costs must be much higher

I don't know the numbers but it's got to be 10 times as far to ship oil to China then it is to the US. That means 10 times as much fuel burnt and 10 times as many tankers to transport it. The Panama canal is too small for most supertankers.

[Pavulon]

6. China cant refine it..

He is full of shit.

[daleo]

8. So China builds the necessary refineries

This is long term stuff. Clearly, China has the technological know-how to process whatever oil they can get.

[Pavulon]

11. China is 3 days from

running out of coal to run the country. Changing refinery operation and the cost of transportation are not trivial things. Certainly will not be done in time for red shirts bluff to become reality.

[ben_meyers]

13. In the meantime we won't have to invade Venezuela

What's left of their economy will collapse and Hugo will be gone. How long will it take China to ramp up it's capacity to handle the tar like crude, and how much more will it cost to dedicate tankers to just shipping Hugo's oil.

Oil is fungible, the world wide market dictates where it's shipped and what it costs.

[wolfgangmo]

45. NO china can't refine it yet

But it won't take them long to build the refining facilities.




And if you think that someone else won't refine for them for some Euros then you have been sniffing too much skunk oil.

[Pavulon]

46. Sure just adds up to cost of producing..

china is about to shut down because of a snow storm. It cost big dollars to set up a refining operation.

In the event that oil is marketed it will still come here. No one else will refine it.

Not to be rude but you do not understand how the market works. Suppliers can not designate where the product goes. They just set a price.

[Purveyor]

37. Also Read: 200000 Barrels-Per-Day Heavy Crude Upgrader In Venezuela Will Undergo A "Major Stoppage"

Not a coincidence, I'm sure...

Venezuela: oil upgrader due for 7-week stoppage

CARACAS, Feb 10 (Reuters) - A 200,000 barrels-per-day heavy crude upgrader in Venezuela will undergo a "major stoppage" for seven weeks of maintenance and repairs starting this month, the state oil company PDVSA said on Sunday.

Norway's Statoil (STL.OL: Quote, Profile, Research) and France's Total (TOTF.PA: Quote, Profile, Research) are PDVSA's minority partners at the upgrader, Petrocedeno, which leftist President Hugo Chavez nationalized last year.

"The goal (is) to do maintenance, cleaning and inspection as well as repairs or modifications to the upgrader's equipment that, because of a natural deterioration, have lost efficiency," PDVSA said in a statement.

The upgrader in Venezuela's massive Orinoco reserve has the capacity to produce 200,000 bpd of heavy crude that it can then process into about 180,000 bpd of more valuable synthetic crude.

Venezuela is one of the biggest crude exporters to the United States. But a series of maintenance stoppages, accidents and power outages at its refineries in the last year have led to lower sales to America of higher-priced finished oil products.

---eoe---


http://www.reuters.com/article/OILPRD/idUSN1056590020080210

[wolfgangmo]

43. Actually it will cost more ...

... for every country that it passes through there is a potential for taxes and then there are shipping costs.




We need that oil. You may not realize it but if Chavez pulls the plug then oil prices are going to skyrocket. And we won't get oil for at least 6 months from Venezuela assuming we can purchase it from someone else. It could be a chilly spring for a lot of people. And why?



Because the worlds richest corporation doesn't want to play ball like every other oil company did.




The people will only be truly free when the last king is strangled with the entrails of the last priest. Bush/Cheney and Dobson anyone?

[Judi Lynn]

51. Outstanding forecast on when we may hope for freedom! Never have heard that one. Unforgettable.

Welcome to D.U., wolfgangmo! :hi: :hi: :hi: :hi:

[Wwagsthedog]

1. Question is -

Will we invvake to ensure a steady supply of Hugo's oil? Sorry, but this sounds like a broken record.

[Demeter]

35. With What Army?

Another broken record

[L. Coyote]

2. No surprise. It is a free world, right?

Or, at least there seems to be some leader somewhere who always insists on the idea.

[northzax]

5. ah, nothing like threatening courts if they don't agree with you

tres democratic. I think he should go right ahead. In three or four years, when china has retrofitted a refinery or four to handle the heavy crude from the Orinoco belt, he can start selling again. In the meantime, well, maybe cutting back on arms purchases from Russia will tide them over?

[Redstone]

15. What? You don't agree with Saint Hugo? Prepare to be flamed.

Redstone

[AP]

23. Ain't nothing like having courts more willing to serve most profitable company in world than serving

justice.

Wonder how Justice Roberts would rule on this case if it made it to Supreme Court?

[olddad56]

107. You get the justice you can afford to buy.

[boricua79]

59. if you ask me, he's right

The courts in question are defending Exxon Mobil's property "rights" over the rights of the people of Venezuela to the revenue of their national resources. In my book, their rights trump the rights of our corporations, and if the U.S. raids Venezuelan assets, they should retaliate.

It has nothing to do with democratic theory or the independence of courts.

And this is a U.S. court. Not a court of Venezuela.

[northzax]

63. actually, of course

the big injunctions are by British and Dutch courts, the US case covers a paltry $315 million (nothing compared to the $11+ billion being frozen in Europe) what this means is that ExxonMobil basically convinced judges in three countries that they could win damages from PDVSA, and got the freeze to ensure that PDVSA doesn't move assets out of those countries before the end of such a trial. Venezuela can, of course, confiscate anything they want to (and do) but if they are going to play in the global economic playground, they need to compensate you for your property. In this case, ExxonMobil had a subsidiary nationalized and didn't like the compenation offered them (neither, by the way did ChevronTexaco or Total, two other companies currently negotiating with Caracas for compensation from their lost companies.

and the court that is actually reviewing the ExxonMobil claim is, I believe, in Geneva.

[boricua79]

71. that it occured in Britain and Holland doesn't impress me

it just means imperialist governments help each other out. I'm sorry, there's no law on the face of the earth that's going to convince me that the people of Venezuela need to compensate a vulturic corporation like Exxon Mobil. It's the other way around.

For centuries, corporations such as Exxon Mobil have been raping the natural resources of Latin America, and often doing so without paying much to the nation "hosting" them. The terms of the game have changed. The people of Latin America are mobilizing for governments that defend them, and these governments are changing the nature of the economic scene in their national territories. On top of all the rape and pillage of resources, they're now supposed to compensate the rapist?

Imagine if the laws of our nation allowed for rape? Imagine that the raped victim had to compensate the rapist for "damages" involved in removing them from their person? Imagine that.

Now see it from the point of view of the Venezuelan people, instead of always from the point of view of Exxon Mobil.

[northzax]

72. ExxonMobil signed a contract with the government of Venezuela

and invested a billion dollars in building the Heavy Oil Upgrading facilities, with the expectation they would have 25 years to make their money back. The government of Venezuela waited until construction was complete and then seized the assets from ExxonMobil, offering less than $500m in compensation.

The facilities were built with ExxonMobil's money, not Venezuela's.

and, by the way, I am seeing it from the people of Venezuela's point of view. They are the ones who were working at this facilities, before their contracts also were 'renegotiated' by the Chavez regime. They are the ones who are losing oil revenue because Chavez is making it a practical impossibility for multinationals with the knowhow to operate oil facilities to operate in Venezuela. They are the ones getting screwed here.

think any other companies are interested in investing in oil production in Venezuela right now? how about some sort of diversification? would YOU invest in a factory in Venezuela right now, when the government has made it clear that it will seize all financially successful properties? would you loan the government money to expand production?

[boricua79]

85. The Government of Venezuela, at the time, was really a government of the elite

surely you must know how American multinationals are used to doing business. A government of the elite comes to power, through duping the population or military control, and then signs accords with multinationals. Certain corrupt officials get financial benefits for facilitating the "legal" transfer of property rights to multinationals, and the multinationals get to "invest" some money in building facilities designed to rape the national resource.

In this case, that criminal-mafia gamble didn't pay off, because the people of Venezuela elected a government dedicated to eradicating all vestiges of such neo-colonial pillage.

If you're asking me to shed tears for Exxon Mobil's loss of its "investment for future pillage" dollars, you're barking down the wrong tree. As a Latin American, my loyalty is to the people.

Where is YOUR loyalty? That may clarify the argument better.

Multinationals are welcome to do business, provided they enter into terms that are FIRST and FOREMOST in the interest of the Venezuelan people, and then beneficial to the multinationals. That's a precondition most multinationals won't do.

Maybe the real question is why the Third World is either bound to be raped and pillaged, or has to do without the "knowhow" to operate these faciilities. Why is the economic system of the world this way? Is allowing the rapist in because he has the "knowhow" the only way?

[northzax]

90. oh please

you will notice that this facility was under construction for four years under the chavez regime, it was only nationalized once it was completed. What a coincidence. This facility cost PDVSA not one penny to design or build. Most of that spent while Chavez was in power. Funny that PDVSA didn't complain about being exploited until the facility was online, huh?

When governments abrogate contracts of seize private property, they should pay fair market value. That's all.

[boricua79]

92. Not when those private entities have been raping the country for decades

It's their turn to feel the loss. that's all.

[Judi Lynn]

91. It IS odd when clowns insist Venezuela's incapable of controlling its own oil production.

Venezuela nationalized its oil (and steel) in 1973. Did fine apparently. Successive dirtball Presidents invited the entire realm of fellow hogs from the multinationals to get in there and get while the getting was good. Tney cut tax deals for them which would horrify and astonish honest folks. Shock and awe, of course.

Venezuela is going to get back on track, the people insist the control is no longer in the hands of the grubby, worthless band of racist a-holes who seized control and attempted to cut the rest of the country loose, just as the European-descended cabal around Santa Cruz in Bolivia is trying to do now, under the guidance and encouragement of _Bush's administration, with the financial aid of the unwitting U.S. taxpayers.

[northzax]

94. yup so capable

that they signed contracts with every foreign oil firm they could to produce oil.

[boilinmad]

97. 25 years?...

...to make their money back?? They make that much profit in a couple of days.

[The Croquist]

77. Would you be more impressed if it was a court in Zimbabwe?

I'd trust a court in Britain and Holland over 90% of the countries in the world.

[boricua79]

87. To be honest

I'm only impressed if it were a Venezuelan court. What right does a British or Dutch court have to rule on the interests and desires of the Venezuelan people. Let's see if the Dutch or British would like it that a venezuelan owned company had decades of ownership over a prime resource of their nation, and then wanted compensation as a result of nationalization by Britain or Holland. The British or the Dutch wouldn't hear of it for a second, and they'd certainly wouldn't pay a goddamned penny to some Venezuelan vulturic corporation.

So why are the Venezuelan people expected to pay off the vulture for its "losses"? How about the vulture take the losses as part of its astronomical profits it made off of Venezuelan throughout the decades.

Fuck Exxon Mobil's property rights. You're ok with taxing all of America to pay off some corporation's use of some resource here at home? That's ok with you? Hell, we didnd't even allow Dubai to own some of our ports. We threw a hissy fit the moment it seemed a foreign corporation would control a national interest of ours (our ports). But the Venezuelan people should just lay down and let Exxon Mobil make profits on THEIR oil.

The double-standards are incredible. There's no goddamned way we Americans or anyone else would pay off some foreign corporation we nationalized...especially if that corporation had been raping our resources for DECADES.

[Peace Patriot]

10. "The Smart Way to Beat Tyrants Like Chávez," by Donald Rumsfeld

"The Smart Way to Beat Tyrants Like Chávez," by Donald Rumsfeld, 12/1/07
http://www.washingtonpost.com/wp-dyn/content/article/2007/11/30/AR2007113001800.html

Yup. That Donald Rumsfeld. In Dec 07.

If you read between the lines a bit (always necessary with Rumsfeld), he says we need to get rid of any remaining "checks and balances" in our own government (Congress, the State Dept.) in order to take "swift action" ("unitary executive") in support of "friends and allies" (fascist thugs planning coups) in South America, after larding more billions of our tax dollars into the Colombian military (and paramilitaries) and creating a "no-rules-about-killing-union-leaders" 'free trade' zone in Colombia, and destroying Venezuela's economy.

Then there's Exxon Mobile...

Exxon wins freeze on $12 billion of Venezuelan assets 2/7/08
http://news.yahoo.com/s/nm/20080208/bs_nm/exxon_venezula_dc
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3173540

Exxon shatters profit records 2/1/08
Oil giant makes corporate history by booking $11.7 billion in quarterly profit; earns $1,300 a second in 2007.
http://money.cnn.com/2008/02/01/news/companies/exxon_earnings/

----

(Re: Exxon Mobile walking out of talks with Venezuela cuz they couldn't kneecap Venezuela into a higher percentage of profit in a new oil venture (that other companies including France's Total agreed to), and running to the World Bank for "arbitration," followed now by their current effort to freeze Venezuela's assets...here's what Don Hodges, of the $700 million Hodges Fund in Dallas, said about it in September...)


"Resistance Applauded 9/12/07

"'I'm glad to see them (Exxon Mobile) do it,' said Don Hodges... 'You don't know what the outcome will be, but you'd rather see them resist it than just lay down and say, `Help yourself to it.'" (emphasis added)
http://oilsandstruth.org/hugo-knows-value-his-tar


(Venezuelans "helping themselves" to their own oil? That's Dallas money men's and Exxon Mobile's view--it's their oil, not Venezuela's.)

-----------------------------------

We are looking at Oil War II: South America. That's what the above highlighted dates mean. Fall 07 to now. It has begun. Exxon fired the first shot on 9/12/07. Rumsfeld announced the economic warfare (and broadly hinted at U.S. military intervention), on 12/1/07. Exxon has now moved to freeze Venezuela's assets. And they and their corporate news lapdogs have been bad-mouthing Chavez all year, calling him a tyrant and a dictator (after numerous failed efforts to overthrow him starting in 02). It's a compressed version of the preliminaries to the Iraq War.

And we thought Rumsfeld was "retired"!

------------------------------------

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3176174

See the above thread for my comment on the Associated Press, and their coverage of Chavez, Venezuela and the huge South American Leftist (majorityist) movement, which has elected Leftist presidents in Venezuela, Bolivia, Ecuador, Argentina, Brazil, Uruguay, Chile and Nicaragua--virtually the entire continent has turned "very blue" over the last half decade--with most of the foregoing friends and allies of Chavez (not so much Chile--they're more "free trade"-type of liberals, more in the Clinton mold). And the main force of the Leftist movement has joined together in new initiatives, like the Bank of the South, toward regional independence and self-determination. (The Bank of the South, for instance, is driving the World Bank loan sharks out the region.)

This is why AP and other war profiteering corporate 'news' monopolies put such stupid reporters on the Chavez beat, and hand them Bush/CIA photocopies to write the "talking points" from. The Dark Lords don't like anybody who turns down their usurious loans, and organizes leftist countries into a powerhouse of social justice and regional strength--especially when they have a lot of oil (Venezuela, Ecuador, Bolivia--and recent big find in Argentina--the closest leftist allies).

[Kolesar]

12. f-king yikes! ... eom

[fascisthunter]

16. You'd Think Duers WHo Were Anti-Chavez Would Read This Post

then slink away in embarrassment. All corporate tools....

[ElsewheresDaughter]

67. WTF are you kidding me?...get thee behind me Satan(Rummy).

[Redstone]

14. Oh, fuck him. The people in Venezuela will soon figure out that they can't eat oil,

if he decides to stop exporting it.

I've lost all the respect I used to have for Mr Chavez; he's turned into the same kind of blowhard, tinpot-dictator-wannabe as bushyboy is.

In his grandstanding of his enmity for bushyboy, he's become bushyboy.

Redstone

[rockymountaindem]

18. Well put n.t.

[ima_sinnic]

19. oh blah blah blah--and "*yboy" has brought what kinds of benefits to The People?

In what ways has "*yboy" turned U.S. resources into assets for education, infrastructure improvement, increased employment, health care, etc. etc. for The People?

I don't understand "democrats" who demonize one of the few truly progressive leaders on the planet. Unless they're just pretend democrats, of course ... :eyes:

[Redstone]

25. Which would be my point, exactly.

Redstone

[Peace Patriot]

20. Oh, right, Redstone! "All the respect I used to have for Mr. Chavez"!

:rofl:

[fascisthunter]

22. Didn't You Know Redstone was Once Pro-Chavez?

lol

[Redstone]

27. Actually, I was. As I said.

redstone

[Redstone]

28. Which I did. You may not like that, but it's the truth.

Redstone

[InkAddict]

33. Food for RefiningTrade-offs

Topic 1: Chavez makes fourth visit to Nicaragua in a year

snip

During Chavez’ visit it was decided that Nicaragua will considerably increase the amount of exports of certain food products to Venezuela during 2008. Agriculture Minister Ariel Bucardo announced that Nicaragua will export 6,000 tons of black beans, 6,000 tons of meat and 23,000 tons of sorghum to Venezuela this year.

The construction progress of the oil refinery in Port Sandino which is being financed by the Venezuelan government was also discussed during the visit. The first phase of construction on the refinery which will allow Nicaragua to export oil and other oil derived products has already begun. According to a government source there are plans for three of the six storage tanks, each with a capacity to store 100,000 barrels of oil, to be installed during the course of the year.

[fascisthunter]

17. GOOD for HIM... Fuck Exxon

and this dip shit fascist government of ours.

[Name removed]

21. Deleted message

Message removed by moderator. Click here to review the message board rules.

[rockymountaindem]

24. So you admit he's a dictator?

And that his supposedly green programs make up for that fact?

[fascisthunter]

29. No... He's Trying to Peddle BS for the Likes of You

[fascisthunter]

26. Self-deleted

[Redstone]

30. Ahem. I'm arguing with DUers in this thread, but I have to wonder about you.

You've been here for a grand total of TWO posts, and you're judging whether "this is DU?"

Redstone

[Kolesar]

32. Not sweet

[Megahurtz]

82. Actually I Agree.

LOL!

[Ian David]

34. If he REALLY wanted to hurt Bush, he'd give the oil to us for $0.05 per gallon. n/t

[Demeter]

36. Or Even $50/bbl

Exxon would lose what's left of its mind over that.

[Judi Lynn]

38. You might remember Chavez made an offer in 2006 to peg oil prices at $50.00 per barrel.

Here's one of the articles which discussed it:

Chávez seeks to peg oil at $50 a barrel· Price could see Venezuela producing for 200 years

· Country's reserves may exceed Saudi Arabia's

Mark Milner The Guardian, Monday April 3 2006

Venezuelan president Hugo Chávez is poised to launch a bid to transform the global politics of oil by seeking a deal with consumer countries which would lock in a price of $50 a barrel.

A long-term agreement at that price could allow Venezuela to count its huge deposits of heavy crude as part of its official reserves, which Caracas says would give it more oil than Saudi Arabia.

"We have the largest oil reserves in the world, we have oil for 200 years." Mr Chávez told the BBC's Newsnight programme in an interview to be broadcast tonight. "$50 a barrel - that's a fair price, not a high price."

The price proposed by Mr Chávez is about $15 a barrel below the current global level but a credible long-term agreement at about $50 a barrel could have huge implications for Venezuela's standing in the international oil community.

http://www.guardian.co.uk/business/2006/apr/03/venezuela.oilandpetrol

[Demeter]

39. I Do Remember

But the deal was that everybody did it, not just Venezuela. He got no takers.

[northzax]

58. of course, OPEC is in a bit of a bind

at $100/bbl, sure, there are great profits, but people start to make changes to their lifestyle to reduce their use of oil, and once those changes are made, people don't go back. the OPEC nations are like drug dealers, or even better, the tobacco companies. they have a product that their customers are addicted to, literally, but it is killing them. There is an optimum price point at which you gain new customers and keep the old ones happy. raise the price too far above that and not only will some of your current customers cut back, potential new customers will find alternatives.

at $50/bbl, there is really no economic incentive to pursue alternative fuels, we just keep the IV hooked up to our veins until we kill ourselves off.

[The Croquist]

78. It was a good call not signing up with him

Only an idiot would sign up. By invalidating his existing contracts with corporations he has proved that his word is meaningless.

If oil dropped to $25.00 a barrel he would expect $50.00 and deserve it. If it rose, like it did, he would renege on the deal.

[boricua79]

60. how would that help the Venezuelan people

to sell the oil so cheap?

He's the President of Venezuela. He has to think of his people first.

[paulk]

40. he needs the money - no one else can process the tar he sells

the VZ economy would collapse completely.

An empty threat that makes him look foolish.

[AllyCat]

41. Oh poor Exxon-Mobil. They just can't make enough $ w/o stealing from Venezuela?

I don't blame Chavez. Trouble is, I am currently participating in a BUYcott of Citgo. Where will I buy gas that isn't Saudi??

Chavez is far from a saint, but he's better than the frickin' Saudis who bombed our country and continue to cavort with an evil dictator (that would be Bush...a REAL dictator, not someone we tagged as one to try to make us look better).

[TankLV]

50. Good for Hugo - I support him on this...

Fuck Exxon - it's Venezuala's oil - not any corporations.

[northzax]

81. read the article

it's not about oil, per se, it is about an upgrading facility company that was a joint venture between PDVSA and ExxonMobil that PDVSA expropriated and offered well below market rates for.

Cerro Negro was built by ExxonMobil, using their technology and their capital. the company was worth about $3b US when PDVSA offered ExxonMobil $500m worth of heavy crude (which, natch, would then have to be processed through Cerro Negro at EM's expense) for 40% of the company. 40% of $3Billion is more like $1.4 Billion, not $500m of barter. when Exxon refused to sell for that price, they were told to leave the country. So they did. and used the arbitration clause in the contract to ask for more money.

PDVSA did not show up at the arbitration hearings, or at the asset freezing injunction hearings. So they lost that round. which tends to happen when you don't show up in court. And before you tell me that PDVSA is not subject to US law, it is when contracts it signs specify that it is. on Feb 14th (I think that is the date) PDVSA will have an appeal of the amount of assets frozen heard. If they actually show up, they are likely to have the amount knocked down to the 1-2 billion dollar total range, instead of $12billion.

PDVSA is a corporation and it is therefore subject to the same laws of trade as ExxonMobil and every other company. it is worth noting, by the way, that PDVSA acknowledges it owes ExxonMobil money, they paid Total and SuncOil a total of $2.5 billion in compensation for abrogating contracts and are in negotiations with ChevronTexaco for the same thing. this is a dispute over how much money, and what form the payment will take. Exxon wants cash, Venezuela wants to pay in oil. don't worry, Venezuela will negotiate and settle, or they will be in serious financial trouble (it's hard to make money when people won't do business with you, when banks won't finance, when insurance companies won't insure, when you have zero credit.

[ohio2007]

52. "A cutoff would drive oil to $200 a barrel, Chavez said today "

snip
A cutoff would drive oil to $200 a barrel, Chavez said today on his ``Alo, Presidente'' weekly talk show on state radio and television.

``If you freeze us, if you don't stop trying to freeze, doing us damage, we can do you damage,'' Chavez said. ``We won't send oil to the U.S. Get this, Mr. Bush, Mr. Danger. If the economic war continues against Venezuela, the price of oil will reach $200. Venezuela will take up the economic war.''


snip

http://www.bloomberg.com/apps/news?pid=20601086&refer=latin_america&sid=aBySYf7eZmDI

Hugo must have inflating issues at home.
Trying to distract his radio audience from the inflation rate with this patriotic saber rattling talk to get oil at $200 bbl will not bring in the petro dollars when the oil field go idle.........

maybe a little downtime is what the oil ifrastructure needs. They lost the ability to repair foriegn owned oil rigs when they nationalized them and neglected the breakdown costs.
jmo,
He sounds a lot like the nutjob Axis brother of his running Iran for the mullahs ;)

[boricua79]

61. Nutjub Axis brother?

Brother...you're sounding mighty Freeperish.

You allright? You sure you're in the right forum?

[northzax]

64. this is nutty

what's the point of driving oil to $200/bbl if Venezuela isn't selling any?

[boricua79]

69. it's a bluff, in my opinion

but he has a valid point: it is not right that the United States defend the property rights of Exxon Mobil over the rights of the Venezuelan people to their oil. Venezuela is trying to deal with centuries of colonial pillage by slowly changing the laws and the flow of "revenue"...from the rich to the masses. That takes times, nationalizations, law changes, etc.

He's telling the Americans to back off attacking Venezuelan assets to compensate Exxon Mobil.

And I agree. Exxon Mobil should not be compensated. It's the other way around. Exxon Mobil owes BILLIONS of dollars to the Venezuelan people, for decades of unchecked pillage of their oil. IT was the elite governments that allowed those vampiric vultures in to Venezuela. It was not governments of the people.

[northzax]

76. Venezuela stole from ExxonMobil

roughly $500 million. sorry, but that's what confiscation is.

you are barking up the wrong tree here, this particular facility was not oil production, it's not an oil well, with ExxonMobil suing for extraction rights, it is an enhancement facility, built by ExxonMobil under contract with the government that was then seized without, in the opinion of ExxonMobil adequate compensation. they put a billion dollars into the facility and were offered a buyout of $500 million, so they went to the court specified in the original contract for arbitration. Given the response of the government of Venezuela to the arbitration request (basically, ignoring it) ExxonMobil figured that Venezuela would never pay any judgement against them, and asked for their assets to be frozen in anticipation of such a judgement. did you expect ExxonMobil to simply take a half billion dollar loss on the project?

It is kind of interesting, isn't it, that after one year of operation by PDVSA, Cerro Negro will now be down for several months for repairs, generating a grand total of ZERO revenue during that period? Where once that risk was assumed by ExxonMobil, it is now assumed by the people of Venezuela through PDVSA. Think they're getting their money's worth on a facility that isn't even operating right now? Any idea how they are going to replace the technology that ExxonMobil installed? Think maybe that ExxonMobil will come fix it for them?

The problem is that PDVSA, like all oil companies today, is spinning off insane amounts of cash, but it can only do so when it operates in the global marketplace as a company, under the same rules as other companies do. PDVSA knew about the filings for these injunctions at least two months ago when they were filed. Did they not tell the government, or did the government not tell the people that $20b was at risk? why is it that despite knowing of the injunction filings in early December, PDVSA's lawyers didn't respond until late January, a month after the ruling was made? that's some good lawyerin' amigo. THe only reason that Chavez is allowed to continue his little redistribution schemes is because PDVSA is so wealthy, giving a ton of hard currency that can be spun out into other little pet projects. Most of that cash comes from markets in the US, or at least passes through US banks. ignoring the US legal system is not a good way to keep doing business in the US, now, is it?

[boricua79]

86. Exxon Mobil STOLE from the Venezuelan people

I'll keep turning it around. You are a priori according equal weight to the property rights of Exxon Mobil. I don't. The oil is not Exxons. The oil is owned by the people of Venezuela.

Since I'm not super knowledgeable about the workings of the Venezuelan oil industry, I cannot address with certainty your questions.

From a more broad-based scenario, I wonder why the only options available to Latin Americans is allowing the rapist in again (because THEY have the knowhow and capital) or trying hard to make it alone and having less than stellar results. It's really a question we should all seriously answer. Why are capitalist entities the only ones with the ability to successfully extract a resource.

I'd much rather have Venezuela not be able to produce as much oil, then return to the days of the rapist sucking off massive amounts of profits off of the people's national resources.

[northzax]

89. the capitalist entities have the texhnology

because they invented it. If PDVSA wants to spend the money to develop the technology, they should do so.

As you say, you don't understand the industry. the facts are that PDVSA was incapable of building this facility without ExxonMobil providing both the capital and the know how. When the contract was signed, oil was selling for ten bucks a barrel, and PDVSA was poor. Now that oil is nine to ten times as pricey, PDVSA wants all the proceeds.

And, of course, the facility is offline now. Wonder who's going to fix it?

[boricua79]

93. If you ask me, this type of technology transfer has been long overdue

The West has funded its technological prowess off of the profits and back of the Third World. Time to equalize wealth around the world, and part of that is allowing the Third World to develop its resources and technologies. This is also why I question why they keep harping on Iran developing ANYTHING. They (and I mean the upper classes) don't want the Third World to develop and challenge their world economic system. They don't want upstarts in foreign countries. They want the world to depend on their technological knowhow...and to control those world resources.

In the long run, I see it as a good thing that PDVSA and other Third World industries get a chance to develop. More competition and a fairer distribution of wealth, resources, and technology.

[Megahurtz]

83. Lol!

:D

[Bacchus39]

68. he is a broken record

n/t

[roamer65]

53. I hope he does it.

Slimeball American oil companies need to be put in their place.

I boycott Mobil stations anyway.

[Hugabear]

54. Exxon-Mobil can go to hell

The nerve of these fucking Big Oil companies, thinking they can just waltz into foreign companies and STEAL their oil, and then turn around and sell it for record profits?

This just reminded me that I need to fill up my tank today. I'll be doing it at Citgo!

[freedomnorth]

56. Go Châvez! nt.

[OKthatsIT]

62. Is THIS Hillary's NEW WAR?

Hillary will continue the Bush plan. Why? Because it's Rockefeller's plan. It's the Queen of England's plan. IT sRothschilds plan. It's Bilderbergs plan.

[ElsewheresDaughter]

65. yeah in retaliation for Exxon Mobil Corp.'s bid to freeze the country's oil assets overseas

http://www.bloomberg.com/apps/news?pid=20601086&sid=aCQq4aSyDsI4&refer=latin_america

[CRK7376]

66. So how soon

will this latest threat to our oil imports cause prices at the pumps to skyrocket over jitters? A the news has recently been hawking that gas prices will fall 50cents by this summer.....Yeah right!

[sarcasmo]

74. Are the 12billion in Venezuelan assets in England?

If they aren't, how the hell can a UK court freeze Venezuelan assets?

[northzax]

80. yup

probably in UK banks.

also in the Netherlands and the US.

but I must say, you get mad props for actually reading enough of the article to notice that the big freeze was in a UK court, not a US one.

[ileus]

88. What a tool.

[DuaneBidoux]

95. Capitalist corporate pig conspiracy or not, this man is an idiot.

He only hurts his own people.

And he obviously has absolutely no understanding of how the world oil market works. Unless he is willing to eat the entire loss of what he would have sold to the US the oil will get shuffled around a bit and he will sell to someone else and we will buy from someone else.

Did this man even go to college at all?

[Deja Q]

96. This is like, what, the third time, right? WWtKofSD?

(the King of Spain)

[northzax]

98. uh oh...

seems the Court in Manhattan turned down PDVSA's appeal...

Court upholds freezing of USD 300 million of Pdvsa assets

Hugo? your play, hoss. show us you mean business, right? and this wasn't all bluster?

*crickets*

[Javaman]

99. Guess you don't read the news...

http://www.cnn.com/2008/WORLD/americas/02/12/venezuela.oil.ap/index.html?eref=rss_topstories

Exxon Mobil cut off from Venezuela's oil

CARACAS, Venezuela (AP) -- Venezuela's state oil company said Tuesday that it has stopped selling crude to Exxon Mobil Corp. in response to the U.S. oil company's drive to use the courts to seize billions of dollars in Venezuelan assets.

[northzax]

100. Chavez threatened to cut off the US from Venezuelan oil

not Exxon (this too was an empty threat, since PDVSA says it will honor all existing contracts with ExxonMobil and subsidiaries and EM has left Venezuela completely.)

so will he cut off supplies to the US? he said he would if the appeal was denied, and the appeal was denied. What's going on?

[northzax]

101. Chavez threatened to cut off the US from Venezuelan oil

not Exxon (this too was an empty threat, since PDVSA says it will honor all existing contracts with ExxonMobil and subsidiaries and EM has left Venezuela completely.)

so will he cut off supplies to the US? he said he would if the appeal was denied, and the appeal was denied. What's going on?

[Mik T]

102. He could be trying to influence the US elections.

Well last time there was an attempted coup there and Venezuela cut off our oil supply the price went up by about 50% and we had to tap into our strategic petroleum reserves to make up the difference. So the Chavez threat is far from idle. Yes, it is a global market but it does still take some time to restructure supply chains. The rest of OPEC only have x amount of oil and it is probably mostly earmarked for distribution elsewhere. It takes time to change this. The oil that comes from Venezuela is shipped to US refineries direct, mostly by tanker.

I have been to Venezuela and very much enjoy Chavez. He is a brilliant strategist. People that call him a petty dictator and other such insults vastly underestimate him at best and insult him at worst.

A republican business exec friend and I were talking about this and I think that there may be a possibility that CHavez is using his battle with Exxon mobil as an excuse to leverage the 2008 elections in favor of Obama. We figure that if Venezuela cuts off it's gasoline supply to the US it will cause gas and oil prices to soar to up to 5$ a gallon. We guessed it would take about 8 months for the US to reroute their suppliers and fully address the shortage. In the meantime further angst will be directed against the Bush administration as a result- making it sure that the selected democrat will get in. Is it a coincidence that he directed that threat right after they published the info that Obama was leading in delegates and likely to win the nomination?

We see this as Chavez putting his eggs silently in the Obama basket. If Obama wins- he resumes or increases his supply of oil to the US through Citgo, dropping the price back to it's current level or lower. If Obama loses, Chavez looks for other customers to refine his surplus oil. He loses some money but it pretty much works out either way. Chavez has a history of using the resources of his country very effectivly to leverage politics in other countries. Bolivia and Argentina are examples of this. The stock market should be very scared right now.

By the way, the postings on the major news networks are really revving up all of their propaganda machines on this topic. Public radio listed the net oil worth of Venezuela at 24 billion and Al Jezera listed it at 90 billion. I think their figure is closer to the truth.

[northzax]

103. are those estimates per annum?

and in dollars? I don't follow them. or is that bbls?

and frankly, if he is playing that silly game with oil trying to influence elections, he's even more of a tinpot than I thought. I do think this is all strategy, but I think it is much more trying to distract people at home from problems. And Chavez needs George Bush, who will he rail against if Obama wins? who will he blame for everything?

[Mik T]

104. Probably in dollars/year they didn't make themselves clear

They throw out figures all the time without making it clear what they are talking about. I wish I could be more specific. I know as of 2006 the venezuelan gdp was 28 billion but, they only owned 40% of their oil reserves at that time.

As far as blaming George Bush is concerned, thats not really where Chavez's heart is at, Like most democratic socialists, he is a strategic internationalist first and wants the best for all the people in the world, not just those in his own country. That's why he has a huge discount oil program for poor Carribian countries. That's why he bought Argentina's debt. That why he provides oil to our northern inner-city poor neighborhoods at a discount. That's why he provides Cuba with oil in trade for the labor of their doctors and teachers. That's why he started the bank of the south. That's why he hosted the World Social Forum. I could go on but I think you see what I am saying. Chavez believes a worker is a worker no matter where they come from. Poverty is poverty no matter where it is located.

Of course Chavez would like nothing more then to get rid of Bush. Like the rest of us with common sense, he believes that he is a criminal, warmongering, embezzeling, danger to the entire planet.

You are arguing all of this stuff in favor of Exxon Mobil- how do you feel about the fact that China is buying up our coal reserves? What if China attempted to overthrow OUR government in a coup and we considered it a matter of national security to get our coal back from Chinese companies? Who would be in the right then? Because thats exactly why Venezuela is renationalizing it's industry. We attempted to get rid of Chavez in a coup. Exxon mobil is a US based company. Do the math- it's pretty easy to see who is in the wrong here.

[Judi Lynn]

105. Great to see you've started posting here! Excellent.

Welcome to D.U., Mik T. :hi: :hi: :hi: :hi:

[Mik T]

106. The Venezuelan Perspective from Venezuelanalysis.com

WIth all of the propaganda out there you might want to hear from both sides before you form an opinion.

(venezuelanalysis.com) - Venezuela's state oil firm PDVSA issued a statement today, in which it said that it was freezing all its business dealings with ExxonMobil, in retaliation for the company's hostile actions in the dispute over compensation for a recently nationalized oil joint venture.

This move comes shortly after PDVSA instructed its traders yesterday to deposit oil receipts with UBS bank in Switzerland in a move to protect its assets. These decisions came days after Exxon announced it had won a series of temporary court orders in Britain, the Netherlands, and the Dutch Antilles, freezing up to $12 billion in PDVSA assets.

As part of a drive to recuperate oil sovereignty in May last year, the Venezuelan government required six major oil companies to hand over equity stakes of 60% or more in four important joint-venture exploration projects in the Orinoco oil belt. U.S.-based Chevron Corp., France's Total, Britain's BP PLC, and Norway's Statoil negotiated deals with Venezuela to remain on as minority partners. However ExxonMobil, along with U.S.-based ConocoPhillips, rejected the terms and its 41.7 percent stake in the Cerro Negro project was subsequently nationalized with an offer for compensation.

ExxonMobil then rejected Venezuela's offer for compenstation and sought arbitration in the International Centre for Settlement of Investment Disputes, (ICSID - a World Bank tribunal), in September.

ConocoPhillips, which has also filed for arbitration, said it remains in "amicable" talks with PDVSA.

As the $12 billion in frozen PDVSA assets far exceeds Exxon's $750 million investment in the project at the time it was nationalized, the move by the U.S oil company appears as an agressive legal tactic to pressure the Venezuelan goverment to agree to it's terms.

Venezuela's Energy Minister, Rafael Ramirez, argued that by soliciting the separate court orders ExxonMobil has violated the pre-existing arbitration proceedings in the ICSID, and said that PDVSA is evaluating the possibility of suing the U.S. oil company for damages resulting from it's legal action, which, among other things, caused Venezuela's dollar denominated bonds to experience their sharpest drop in six months.

Ramírez added that the legal actions of ExxonMobil were clearly linked the the U.S. government's policy towards Venezuela, which, President Hugo Chavez said on Sunday, involves a strategy of social and economic destabilisation to oust his government.

The Federal Court in NewYork will hold a hearing on Wednesday over an earlier injunction, solicited by Exxon in January, which froze $300 million of PDVSA funds in a U.S bank account. Exxon claims the court injunctions are necessary to secure compensation if it wins the arbitration case.

However, Patrick Esteruelas, of the Eurasia Group in New York said for the injunctions to be upheld Exxon would "probably have to prove that PDVSA has no intention of compensating them."
In contrast, PDVSA has consistently indicated it would negotiate compensation "at a fair price" and is likely to argue on Wednesday that the injunctions are unnecessary because it has paid out partners in previous disputes - in January, PDVSA agreed to pay compensation of close to $1 billion to Total and Statoil, for the partial nationalization of their holdings.

If PDVSA wins its appeal on Wednesday it could potentially help to overturn the British and Dutch court rulings scheduled for later this month.

President Chavez threatened to cut off supplies to the U.S. if PDVSA's assets remained frozen, causing oil prices to spike at almost $95 a barrel on Monday. However, many analysts haved argued the Venezuelan economy is too dependent on income from U.S. oil sales to cut off supplies.

Roger Tissot, an energy consultant based in Canada pointed out that a 2002-03 shutdown by managers at PDVSA, the state oil company, practically cut off oil exports to the United States. While "U.S. consumers saw gas prices rise a few cents for a time, the strike nearly caused the collapse of Venezuela's economy," he said.

Venezuela supplies about 10 percent of U.S. oil imports, accounting for 65 percent of Venezuela's income from oil exports, which in turn account for almost 90 percent of total exports. PDVSA is the key source of funds for the government's social projects that provide free education and healthcare for the poor.

Conversely, in a statement released today, Robbie Diamond, President of the Securing America's Future Energy (SAFE) lobby group, said Chavez's threat emphasizes "the precarious nature of our energy security."

"With global spare oil production capacity as narrow as it is, any threat by a major supplier has the potential for causing immediate and significant fluctuations in the price of oil worldwide, with tremendous economic implications for the United States," he added.

Others have pointed out that while the U.S. could source oil from other countries, PDVSA is particularly reliant on its U.S. refining subsidiary, Houston's Citgo Petroleum Corp., to process the country's heavy crude, which is more difficult and expensive to process than lighter crudes.

However, Ramirez assured that Venezuela is ready to cut supplies immediately if necessary and is working with China to construct three oil refineries capable of processing 800,000 barrels of Venezuelan heavy crude per day.

[Megahurtz]

108. Maybe He Should.

I would if I were him.