Venezuela

Chávez squeezes the oil firms

Nov 10th 2005 | CARACAS

From The Economist

A forthright abuse of market power that could eventually backfir

IF OVERHEATED rhetoric could be harnessed as an energy source, Venezuela would be well placed to survive the eventual transition to a post-oil world. “We have done nothing less than to snatch the world's biggest oil reserves from the mouth of imperialism,” the oil minister, Rafael Ramírez, told an enthusiastic audience at the foreign ministry recently. In the same room, a couple of weeks earlier, a radical academic close to the army commander, General Raúl Baduel, took a contrasting line: “If we have an anti-imperialist discourse here, why are we welcoming the chairman of ChevronTexaco?”

For the minister, and the country's avowedly socialist president, Hugo Chávez, this marks a return to sovereignty over the country's biggest asset. Others on the left, though, think even the new, tougher terms are a sell-out. Mazhar al-Shereidah, a Venezuelan oil economist of Iraqi origin, argues that the new arrangements relieve the oil firms of all risk. It is “tragi-comic”, he says, that they are being given a so-called ultimatum to accept just the sort of joint-ventures that they have happily agreed elsewhere. Conservative regimes in Saudi Arabia and other Gulf states would not dream of letting foreign firms into their upstream business in this way, he says.