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Chavez goes nose to nose with Big Oil April 29, 2007

Posted by daveintexas in Bidness, drama, Leftard Freakshow.

Bet they wish he had taken a breath mint.

Taking control is easy.  Convincing US energy producers to stay on and invest, not so easy.

Hugo is nationalizing Venezuelan oilfields.  On Tuesday, British Petroleum, ConocoPhillips, ExxonMobil, ChevronTexaco, Total (France) and Statoil (Norway) will turn over their Orinoco operations to Venezuela’s state oil company, PDVSA.

Celebration to include revolutionary garb and MiG flyovers.

Problem is, Hugo needs these companies to help him get his tarry crude out of the ground, and to process it.  He claims Russian, Chinese and Indian energy producers are waiting to step in if the others won’t play, but they lack the technical ability to refine this stuff.  They might buy develop it. but it’ll take a long time, and Hugo is betting he won’t need a long time (he may not have it when the pinch is felt at home).

There are only 3 refineries in the world that can turn this stuff into gasoline.  Two of them are in Texas, and one is in Illinois.

ChevronTexaco CEO Dave O’Reilly says it all depends on “how we get treated in the current negotiation”.  ExxonMobil’s CEO Rex Tillerson says it’s either profitable or they’re out.  Both are long-time execs who have seen nationalization come and go, and understand all too well what the impact of lowered reserves mean to their bottom line and the return to shareholders.

It will take more than Hugo’s greasy handshake to seal the deal.  But it’s not easy to walk away.  Jointly their investments are booked at 17 billion, and estimated to have a current worth of 30 billion.  Chavez will have to give them something to keep them in the boat.

Having had two solid years of growth/profitability give O’Reilly and Tillerson a little more breathing room.  It will be interesting to see how far each side gives.



1. kevlarchick - April 29, 2007

Can we afford to sit back and wait for the fallout? Can we let it ride?

I still don’t understand why gas is $3 a gallon. Obscene.

2. harrison - April 29, 2007

KC- It’s springtime. The refineries are having to switch over to the various gov’t mandated “boutique” gas recipes. Happens every year.

3. daveintexas - April 29, 2007

That’s part of it harrison – the relief the refineries were given after Katrina and Rita (12 formulas used to be mandated, it switched to 4 last year) is over now, we’re back to 12 mandated formulas.

The biggest factor though is still investors buying futures contracts believe the price will hold through the summer. The cost of a barrel of oil still represents 55% of the cost of a gallon of gasoline.

KC, we can, because supplies are good, and OPEC has agreed to increase production again (the only thing you can trust them OPECers over is keeping the money flowing). They have no interest in Chavez developing those fields.

4. Calgary Real Estate - April 29, 2007

Statoil didn’t take long to look elsewhere. They took their marbles and came to Canada, paying $2.2-Billion for 1,100 sq kms of oil leases held by Canada’s North American Oil Sands Corp.

read more at http://www.realestatewebmasters.com/blogs/calgary-realtor/1467/show/

5. harrison - April 29, 2007

Hmm, truly informative spam.
What will they think of next?

6. daveintexas - April 29, 2007

That’s awesome.

You think the Viagra guys have any stake in BP?

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