Tag Archives: ENI

Aug
2
2012
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Venezuela’s opposition wants to scrap preferential oil deals

Reuters
August 1, 2012
By Marianna Parraga

Capriles in Anzoategui state Venezuelas opposition wants to scrap preferential oil deals

Courtesy of: Reuters / Carlos Garcia Rawlins

Venezuelan opposition leader Henrique Capriles said on Wednesday he would scrap preferential oil deals with foreign allies if he defeats socialist President Hugo Chavez in an October election to lead the South American OPEC member.

Chavez has sought to boost his influence abroad by offering crude deals to nations in Asia, Latin America and the Caribbean — Venezuela’s state oil company PDVSA was not paid directly for almost half the crude it pumped last year.

In Capriles’ first major speech on his future oil policy, the 40-year-old said stopping Chavez’s deals for crude on credit or in exchange for other goods would save $6.7 billion annually, which would be invested in new social programs.

“To have a friend, you don’t need to buy him,” Capriles said during a campaign stop a few kilometers from the Puerto La Cruz refinery. “From … 2013, not a single free barrel of oil will leave to other countries.”

The youthful former state governor named Belarus, Cuba, Jamaica, Dominican Republic, Uruguay and Argentina as countries that would stop receiving oil on preferential terms.

In 2011, PDVSA — the fiscal motor of Chavez’s socialist policies — was not paid directly for 43 percent of its barrels of crude and oil products, rising from 36.5 percent in 2010 and 32 percent in 2009.

Many of the agreements are criticized by his opponents, especially those signed over the last decade with China, Cuba, Argentina, Uruguay, and the more than a dozen countries that are members of Venezuela’s Petrocaribe supply program.

Chavez — who underwent three operations for cancer over the last year — is seeking re-election for a third term on October 7 to extend his self-styled socialist “revolution” and is spending heavily to beat Capriles.

Most opinion polls give him a double-digit lead.

‘NO LEGAL CHANGES PLANNED’

Capriles is seeking to tap into pent-up frustration among many voters weary of high crime, inefficient public services and high prices. He has been on a months-long “house-by-house tour” through Venezuela meant to win over Chavez supporters and draw a comparison with the recovering president.

Capriles — who frequently cites Norway as an example of a nation that has used its oil wealth properly to diversify the economy — said he planned no legal changes to the oil industry, although there would be more supervision of the activities of public and private companies that are partners of PDVSA.

Chavez ordered the nationalization of dozens of crude projects in 2006 and 2007, but Venezuela has still managed to attract partners from Russia, Vietnam, Belarus and Malaysia to join PDVSA-led projects.

Companies including U.S. major Chevron, Spain’s Repsol and Italy’s ENI have also been drawn by the world’s biggest crude reserves, which are mostly located in the Andean country’s Orinoco Belt.

Oil accounts for more than 90 percent of Venezuela’s exports.

Capriles promised to use the extra resources from stopping preferential deals, plus money from a planned doubling of production between 2013 and 2020, to fund programs such as raising benefits for pensioners, scholarships for mothers of handicapped children, and education.

“Where will all these resources go? Not to tanks, not to a hospital in Nicaragua, not as donations,” Capriles said.

(Writing by Jack Kimball; Editing by Daniel Wallis and M.D. Golan)

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Feb
7
2012
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ICYMI:Save the Prosperity Infrastructure

Save the Prosperity Infrastructure
The Hill
February 7, 2012
By James K. Glassman

In declaring last month that he won’t abide by rulings of the main international forum for settling investment disputes, Venezuela President Hugo Chavez is following in the footsteps of Argentina’s leaders, whose brazen behavior is encouraging other nations to ignore the legal framework that gives investors confidence to invest trillions of dollars in faraway projects essential to global economic growth.

Chavez told a television audience on Jan. 8: “We have to get out of that ICSID, and I tell you, We will not recognize any ICSD decisions.” Venezuela has 21 cases pending before the World Bank’s International Centre for Settlement of Investment Disputes, totaling $40 billion, or one-tenth of the country’s gross domestic product. The claims stem from expropriations of the assets of such U.S. energy companies Exxon Mobil, ConocoPhillips, and Chevron as well as Europe’s Repsol, ENI, and Staoil.

Chavez’s threat is only display of contempt for what can properly be called the “prosperity infrastructure.” One of the great gifts of Western civilization, this is the framework of international law and global trade rules, enforcement of the sanctity of contracts, and the power to ensure that the world’s oceans and air routes are open to commerce. While the infrastructure was developed mainly by the United States and Britain, its positive externalities extend around the globe. Everyone gains.

In their book Invisible Wealth: The Hidden Story of How Markets Work (Encounter, 2011), Arnold Kling and Nick Schulz show that today the most important sources of wealth aren’t natural resources or factories. They reside in what the authors call “the software layer,” which is “a set of expectations and rules about negotiating, financing, and post-purchase obligations” (p. 5). These are among the intangibles that comprise the prosperity infrastructure.

A World Bank study looked at the difference between the total wealth of a nation and subtracted from it natural and produced capital. The result is intangibles, and the study concluded, “The most striking aspect of the wealth estimates is the high values for intangible capital. Nearly 85 percent of the countries in our sample have an intangible capital share of total wealth greater than 50 percent.”

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Jan
17
2012
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ICYMI: Venezuela Tightens Control of Oil Industry

Venezuela tightens control of oil industry

Financial Times

By Benedict Mander in Caracas and Sylvia Pfeifer in London

Venezuela has made another push to increase control over its oil industry, announcing plans to leave the World Bank’s international arbitration body and potentially putting billions of dollars of foreign investment at risk.

Rafael Ramírez, the country’s oil minister, at the weekend confirmed plans to settle disputes with foreign companies within its own judicial system. The decision would affect more than 20 foreign companies that have unsettled disputes after private sector assets were expropriated by Venezuela’s socialist government as part of a drive to increase its control over so-called “strategic” industries that began in 2006. Analysts have estimated the outstanding compensation claims, largely by industrial groups including oil, could add up to as much as $40bn.

The decision could also undermine investor confidence in the country whose natural assets have attracted some of the world’s leading oil and gas groups, including Europe’s Repsol, ENI, and Statoil, as well as Chevron of the US. Despite tax increases and contract changes many companies have remained eager to invest in the country’s Orinoco extra heavy oil belt.

“The common sense approach would probably be one of wariness,” said an executive at one European energy group about the decision, declining to be identified.

“What is already a fairly complex process, looks like it will get even more so,” said Peter Hutton, analyst at RBC Capital Markets.

“We do not accept impositions and we are going to rescue our national sovereignty,” Mr Ramirez had said in a televised interview on Sunday, adding that Venezuela would seek to renegotiate dozens of international investment-related agreements.

The decision to withdraw from the International Centre for Settlement of Investment Disputes (ICSID), based in Washington, means that disputes with foreign companies, including an unsettled disagreement with ExxonMobil, will be heard by Venezuelan judges.

The news follows the announcement on January 1 of a settlement at the Paris-based International Chamber of Commerce (ICC) which awarded Exxon a net payment of only $747m, substantially less than the $6.5-7bn it was said to be seeking, after its assets in Venezuela were expropriated in 2007.

Venezuela appears to have accepted the ruling by the ICC, where only the contract was in dispute, but has said it will not respect any decision at the ICSID, where it is the violation of a bilateral investment treaty that is being disputed, which is far broader in scope.

At stake for Venezuela is the appetite of foreign oil companies to invest in extracting the extra-heavy crude from the Orinoco Belt. Venezuela’s proved oil reserves exceed 200bn barrels but it produces fewer than 3m barrels per day. With the help of foreign investment, Venezuela hopes to double production in the coming years. Exxon declined to comment on Monday. So did Total, Repsol and ENI.

Venezuela’s allies Bolivia and Ecuador also recently withdrew from the organisation. Argentina has so far remained within it, although industry-watchers pointed out that this has not prevented the country from disagreeing with ICSID rulings.