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Venezeula took control of oil fields and refineries last week from foreign oil companies processing crude in the Orinoco River Basin. The government of Hugo Chavez has been negotiating with the major oil campanies for new terms under which they might still stay involved. But as Houston Public Radio’s Ed Mayberry reports, one former U.S. ambassador to Venezuela is not surprised by the tougher terms.
Former U.S. Ambassador to Venezuela William Luers says the takeover of international oil interests by the Chavez government is a tragedy for the Venezuelan people.
“I was there when they set up Venezuelan Petroleum Company, and they set it up with a professional group taken from the former international oil companies and people who were experienced in running the business. And all through the difficult periods of Venezuela’s history, they kept very professional, probably the most professional of the nationally-owned oil companies. Now, chavez has kicked out most of the professionals, and it’s being run like a rather typical government entity with political leadership and lyoalty to the president, and not always with the economic and oil interests for the country involved.”
Because Venezuela produces “heavy” oil, it will take a lot of new technology to make the fields profitable. Luers says ultimately, the oil companies and Chavez will reach some sort of agreement.
“And the question is, how far will they go? One of two companies didn’t sign the deal. But Exxon, Chevron and some of the others have had a long tradition of working through this time.” Ed: “And oil companies are used to having to deal with…” “Tough, tough situations, and I’m hoping that they will continue to find a way to make it work because it’s hard to imagine Chavez without their knowledge, expertise and technology.”
Chavez threatened to throw Houston-based ConocoPhillips out of the country for continuing to resist the government’s takeover of its multi billion-dollar oil operations. Ambassador Luers says he’s not sure what will happen next.
“In the case of the previous cycle, I think several companies just pulled out. As the oil strain becomes greater, it’s hard to imagine that a company that size would eventually give up access to this oil.” Ed: “The oil industry is, by nature, international and has to deal with geopolitics all the time. I mean, we see it in Nigeria…” “Well, the industry was nationalized before, and then, over time, because they needed the technolog, they needed particularly the new investment in the heavy oil belt, they let out contracts for technology for the developing of the oil. And as you say, they’re experienced worldwide. They’ve had a long record of success!”
Luers is now president of the United Nations Association. He was in Houston to address students of the University of St. Thomas International Studies Center. Ed Mayberry, Houston Public Radio News.