- On June 27, the New York Times and Wall Street Journal
vied for attention with feature stories on oil giants ExxonMobil and ConocoPhillips
"walking away from their multi-billion-dollar investments in Venezuela"
as the Journal put it, or standing "Defiant in Venezuela" as
the Times headlined.
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- Both papers can barely contain their displeasure over
Hugo Chavez wanting Venezuela to have majority ownership of its own assets
and no longer let Big (foreign) Oil investors plunder them.
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- Those days are over. State oil company PDVSA is now
majority shareholder with a 78% interest in four Orinoco joint ventures.
That's up from previous stakes of from 30 to 49.9%. That's how it should
be, but it can't stop the Journal and Times from whining about it.
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- What ExxonMobil and ConocoPhillips reject, oil giants
Chevron, BP PLC, Total SA and Statoil ASA agreed to. They're willing to
accept less of a huge profit they'll get by staying instead of none at
all by pouting and walking away as their US counterparts did. Or did they?
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- The Wall Street Journal reports "Conoco isn't throwing
in the towel in Venezuela yet. By not signing a deal, the Houston company
kept open the option of pursuing compensation through arbitration."
Exxon, however, is mum on that option for now. Responding to Energy Minister
Rafael Ramirez saying the two oil giants will lose their stakes in the
Orinoco oil fields altogether, a company spokesperson expressed "disappoint(ment)
that we have been unable to reach an agreement on the terms for migration
to a mixed enterprise structure (but will) continue discussions with the
Venezuelan government on a way forward."
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- So, what's likely ahead as most Big Oil giants agree
to Venezuela's terms while two outliers haven't yet but may in the end
do so. The country's oil reserves are too lucrative to walk away from,
especially with Russia now pressuring foreign investors the same way. It
also wants majority stakes in its own resources with its giant oil and
gas company Gazprom in control. It has a monopoly over the country's Sakhalin
gas field exports and has taken over two of the largest energy projects
in eastern Russia.
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- If these actions by Venezuela and Russia succeed as is
likely, they may influence other oil producing nations to follow a similar
course and pursue plans for larger stakes in their own resources as well.
Why not? They own them and even with less ownership interests, Big Oil
will still earn huge profits from their foreign investments. They just
won't be quite as huge as they once were with one-sided deals benefitting
them most. So the end of this story may not be its end according to Michael
Goldbert, head of the international dispute resolution group at Baker Botts,
an influential law firm representing major international oil companies.
He said he didn't think the June 26 actions were "necessarily the
end of the story (adding) The prospects of a deal are never over until
a sale is made or an arbitrator reaches a decision."
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- The investments are large ranging from $2.5 - $4.5 billion
for Conoco and $800 million for Exxon if Venezuela assumes ownership of
its heavy oil projects. Conoco explained "Although the company is
hopeful that the negotiations will be successful, it has preserved all
legal rights, including international arbitration." Exxon also expressed
its hope an agreement could be reached permitting it to continue operating
in an ownership role.
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- It looks like Conoco and Exxon want one foot in and the
other outside Venezuela to keep its interests in the country alive. It
also looks like they're playing games and letting the Wall Street Journal
and New York Times do their moaning about what they ought to be grateful
for - the right to invest and earn huge profits the way other Big Oil investors
are opting to do.
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- Despite their June 26 decisions, Exxon and Conoco may,
in the end, make the same choice. If they don't, the stakes they relinquish
will shift to other producers according to James Cordier, president of
Liberty Trading Group in Tampa, Florida. He said production won't halt,
and "Before everyone walks out, a deal will be struck and production
there will continue." Caracas-based petroleum economist Mazhar al-Shereidah
agrees saying "Venezuela is now free to find other partners (and)
this doesn't constitute a dramatic situation." There are plenty of
capable and willing takers around.
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- Conoco and Exxon may in the end accept less of a good
investment, stop whining about it, and continue operating in Venezuela.
Why not? The country is more open than many other oil-producing nations
with much of their world's proved reserves controlled by state monopolies
barring private investment. Venezuela barred them from 1975 - 1992 when
the nation's energy sector was completely nationalized. That changed with
a series of partial privatizations in the 1990s, and Chavez said he has
no plans to reinstitute a complete oil industry nationalization. Private
investors can thus remain in the country and continue earning huge profits
doing so. Conoco and Exxon may decide after all to share in them.
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- Venezuelan V. Iraqi Oil Policies - A Study in Contrasts
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- High-level US officials from the administration, Congress
and Pentagon are pressuring the puppet Iraqi parliament to pass its new
"Hydrocarbon Law" drafted in Washington and by Big US and UK
oil companies. Its provisions are in stark contrast to Venezuela's oil
management policies under Hugo Chavez. For Chavez, his nation and peoples'
interests come first. In Iraq, however, Big Oil licensed plunder will
become law if the parliament agrees to accept what its occupier and corporate
interests demand. At this stage, it's nearly certain it will clearing
the way for stealing part of what a US state department spokesperson in
1945 called "a stupendous source of strategic power, and one of the
greatest material prizes in world history" - the vast (mostly Saudi)
Middle East oil reserves.
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- In Venezuela, the nation and its people will benefit
most from the country's oil wealth. In Iraq, their resources are earmarked
mostly for Big US and UK Oil. The new "Hydrocarbon Law" is a
shameless act of theft on the grandest of scale. It's a privatization
blueprint for plunder giving foreign investors a bonanza of resources,
leaving Iraqis a mere sliver for themselves. As now written, its complex
provisions give the Iraqi National Oil Company exclusive control of just
17 of the country's 80 known oil fields with all yet-to-be-discovered deposits
set aside for foreign investors.
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- Even worse, Big Oil is free to expropriate all earnings
with no obligation to invest anything in Iraq's economy, partner with Iraqi
companies, hire local workers, respect union rights, or share new technologies.
Foreign investors will be granted long-term contracts up to 30 or more
years, dispossessing Iraq and its people of their own resources in a naked
scheme to steal them.
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- The Wall Street Journal, New York Times and rest of the
dominant US media shamelessly denounce Hugo Chavez for his courage and
honor doing the right thing. In contrast, their silence, and effective
complicity, on what will be one of the greatest ever corporate crimes when
implemented shows their gross hypocrisy. It'll be up to the people of
Iraq to resist and reclaim what Venezuelan people already have from its
social democratic leader serving their interests above all others.
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- Stephen Lendman lives in Chicago and can be reached at
lendmanstephen@sbcglobal.net.
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- Also visit his blog site at sjlendman.blogspot.com and
listen to The Steve Lendman News and Information Hour on TheMicroEffect.com
Saturdays at noon US central time.
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