Venuezuela pulls control from Big Oil
By Mark Reback
It’s no surprise that Venezuelan President Hugo Chavez did what he said he would: Take majority control of the Orinoco oilfields of Chevron, Exxon Mobil, BP and Conoco Phillips. The oil markets yawned. But the struggle isn’t over, with negotiations on terms continuing into June. But the dangers of this deal will continue far longer.
Venezuela has lifted a threat to deny any compensation to the companies, but for certain what’s paid won’t be anywhere near market value. As this unwilling and uneasy partnership goes forward, there are also questions about whether new exploration and drilling will be ably managed.
A report today from public radio’s Marketplace that critics of the Chavez government will likely be purged from oil company payrolls is not a good sign. The financial markets apparently think likewise, with a sharp drop today in the Venezuelan government’s credit rating.
It’s one more oil deal turning into a source of global instability