Click on the headline (link) for the full text.
Many more articles are available through the Energy Bulletin homepage
Venezuelan oil
Tim Shufelt, The Globe and Mail
Well, this is the story of a man named Chavez, poor President barely kept his country fed. Then one day, shooting at some food, up through the ground came a bubblin’ crude … The U.S. Department of Energy estimates Venezuela’s reserves at 1.3 trillion barrels, more than all other OPEC members. Yet, the country is now importing 100,000 barrels of Russian crude oil a day.
1 IT’S ALL ABOUT THE BITUMEN, MAN
Oil was first discovered in northwestern Venezuela in 1921 and, much like the Beverly Hillbillies, the country’s ruling class was soon living large on black gold. Production from those original reserves is now declining, however, and the future of the Venezuelan oil industry is largely banked on the Orinoco oil belt and its massive reserves of heavy bitumen, the same type found in the Alberta oil sands.
Once the price of oil surged past the $50-(U.S.)-a-barrel mark, much of the Orinoco oil sands suddenly became economically viable, and with Orinoco included, the U.S. Department of Energy now pegs Venezuela’s total estimated reserves at 1.3 trillion barrels, greater than the combined reserves of all other OPEC members. Venezuela’s state-owned PDVSA is now the world’s fifth-largest producer of oil, generating more than $75-billion in annual revenue.
2 PISTOLS AT DAWN!
Hugo Chavez was elected Venezuela’s President in a landslide victory in 1998. Ever since, he has fired up his not-so-witty rhetoric against the United States, calling U.S. President George W. Bush “the devil” in a recent speech to the UN General Assembly and suggesting U.S. Secretary of State Condoleezza Rice was “sexually frustrated.”
This followed past embarrassments to American officials, such as in the aftermath of hurricane Katrina when Chavie did a heck of a job offering relief funds and supplies to victims before the Federal Emergency Management Agency got around to mobilizing efforts in New Orleans. Then, about Christmas-time, 2005, Mr. Chavez delivered cheap heating oil to poor families in New York and Boston, resulting in accusations of treason by American politicians toward those who accepted the oil.
Mr. Chavez continues to impart his PR campaign with a touch of subtle ambiguity, with such taglines as “Go to hell, gringos!”
(30 June 2007)
Background on Venezuela, mixed with some broad humor aimed at both the U.S. and Venezuela. -BA
It’s our oil
Exeunt Exxon and Conoco
The Economist
WHEN Venezuela’s government announced this week that two American oil giants, Exxon Mobil and ConocoPhilips, would walk away from their large investment in the Orinoco heavy-oil belt rather than accept tough new contract terms, officials presented it as the recovery of sovereignty over another slice of the country’s all-important oil industry. Some other Venezuelans saw a government blunder that could accelerate the decline of the state oil company, Petróleos de Venezuela (PDVSA). Either way, the impact of the walkout may not be immediate.
The companies were among those attracted to Venezuela in the 1990s, under the terms of an oil “opening” that the leftist government of President Hugo Chávez has now pronounced shut. In common with other big oil producers, Venezuela has substantially raised its tax take from private oil producers as its bargaining power has risen along with the oil price. Now it has also completed the process of obliging all foreign companies to accept minority shares in joint ventures with PDVSA.
Seven of the 11 companies operating in the Orinoco belt, including Chevron of the United States, Britain’s BP and France’s Total, agreed to the new terms. Along with Exxon and Conoco, Petro-Canada and Opic, a Taiwanese company, did not. Venezuela will pay compensation, possibly running into billions of dollars.
(28 June 2007)
This article is currently public access, but that may change.
Big Oil and Big Media V. Hugo Chavez
Stephen Lendman, Znet
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. 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. 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.
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? 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.”
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.
(30 June 2007)
Leftist commentary on Venezuela at MarxMail.
Mexico’s Calderon sees oil exports falling further
Reuters
Mexican President Felipe Calderon said on Friday he expected the country’s crude oil exports to slip further this year and next after a decline in 2006.
“Starting in 2006, the volume of our oil exports has been falling at an alarming rate and from what we have observed up until now, this year and the next will be no exception,” Calderon told a banking event.
(29 June 2007)
Contributor Jeffrey J. Brown writes: “Yet another top 10 net oil exporter that is showing declining net oil exports.”
Iraq: Oil and Gas Legislation, Revenue Sharing, and U.S. Policy
Christopher M. Blanchard, U.S. Congressional Research Service
Iraqi leaders continue to debate a package of hydrocarbon sector and revenue sharing legislation that will define the terms for the future management and development of the country’s significant oil and natural gas resources. The package includes an oil and gas sector framework law and three supporting laws that would outline revenue sharing mechanisms, restructure Iraq’s Ministry of Oil, and create an Iraqi National Oil Company. Both the Bush Administration and Congress consider the passage of oil and gas sector framework and revenue sharing legislation as important benchmarks that will indicate the current Iraqi government’s commitment to promoting political reconciliation and long term economic development in Iraq.
Section 1314 of the FY2007 Supplemental Appropriations Act [P.L.110-28] specifically identifies the enactment and implementation of legislation “to ensure the equitable distribution of hydrocarbon resources of the people of Iraq without regard to the sect or ethnicity of recipients” and “to ensure that the energy resources of Iraq benefit Sunni Arabs, Shia Arabs, Kurds, and other Iraqi citizens in an equitable manner” as benchmarks on which the President must report to Congress in July and September 2007. The draft framework legislation approved by Iraq’s Council of Ministers (cabinet) in February 2007 does not include revenue sharing arrangements. The companion revenue sharing law defines terms for revenue distribution. The Council of Representatives (parliament) has not yet considered either bill.
The central importance of oil and gas revenue for the Iraqi economy is widely recognized by Iraqis, and most groups accept the need to create new legal and policy guidelines for the development of the country’s oil and natural gas. However, Iraqi critics and supporters of the proposed legislation differ strongly on a number of key issues, including the proper role and powers of federal and regional authorities in regulating oil and gas development; the terms and extent of potential foreign participation in the oil and gas sectors; and proposed formulas and mechanisms for equitably sharing oil and gas revenue. Concurrent, related discussions about proposed amendments to articles of Iraq’s constitution that outline federal and regional oil and gas rights also are highly contentious.
The current military strategy employed by U.S. forces in Iraq seeks to create a secure environment in which Iraqis can resolve core political differences. However, it remains to be seen whether the package of hydrocarbon legislation under consideration will promote reconciliation or contribute to deeper political tension. Administration policymakers and Members of Congress thus face difficult choices with regard to encouraging timely consideration of hydrocarbon legislation and related constitutional reforms while attempting to ensure that the content of proposed laws and amendments reflects compromises reached by and acceptable to Iraqis. This report reviews the package of legislation currently under consideration, analyzes the positions of various Iraqi political actors, and discusses potential implications for U.S. foreign policy goals in Iraq. The report will be updated to reflect current debates and new developments. See also CRS Report RL31339, Iraq: Post-Saddam Governance and Security, and CRS Report RS22079, The Kurds in Post-Saddam Iraq.
(26 June 2007)
The full 22-page report is available on-line as PDF.
