Venezuela has given the world’s biggest oil company, ExxonMobil, until the end of this year to enter a joint venture with the state.
Failure to do so will almost certainly result in Exxon losing its oil field concessions in the country.
Venezuela’s socialist government has now signed new agreements with almost all foreign petroleum companies.
After months of pressure from left- wing leader Hugo Chavez most foreign oil firms working there have caved in.
They have agreed to hand over a controlling stake of their oil interests to the Venezuelan state.
This means that Venezuela, which has the world’s largest petroleum reserves, now calls the shots in what the foreign guests can and cannot do.
In addition, the companies which have signed the new contracts – such as Chevron, BP, Shell and Total – will in future be presented with much higher tax bills by the government.
But Venezuela says it is only fair that the foreigners are made to pay up as they have got away lightly in the past.
Much of the oil revenue in Venezuela goes into social projects in shanty towns and poor rural areas.
But the US oil giant, ExxonMobil, is digging in its heels and is so far refusing to agree to the terms of the new deal.
Exxon risks losing Venezuelan operations if it fails to comply.
Can you beat that? Chavez, alone among Venezuelan leaders of the past 40 years or so, is putting his foot down on Big Oil. Somehow, he’s flipped the situation so the corporations that used to have their boot on his country’s neck, are now answerable…and are paying what they should have done all along for their right to sell his country’s oil. There is NO compelling reason why they should not respect the laws of the land…after all, it’s Venezuela’s oil, not theirs. And it’s not as if they can’t afford the tax bills, either.
If Exxon keeps up as it is doing, it will only end up isolating itself, and that’s going to be to its detriment. As it stands, the state-owned PDVSA has gained RAPIDLY on the Big Oil companies. Check out PDVSA’s standing relative to Exxon right now:
In the most recent issue of the “Petroleum Intelligence Weekly” they have a ranking of world wide oil companies. Out of the 50 companies ranked PDVSA has now moved UP to 3rd place behind only Exxon-Mobil and Saudi Aramco.
At this rate, they’ll only have Aramco left to contend against. I hope Aramco can stand the strain. It’s not everyday that you hear about a state-run company that donates its profits to the state to improve the lives of the poor beating the fat cats at their own game…
Evo Morales has a hard act to follow, but he couldn’t have picked a better friend as his example.