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Venezuela Flexes Oil Muscle US sees oil and Chavez's ambitions as a troublesome
mix By Jim Bencivenga | csmonitor.composted April 20, 2005, updated 12:30 p.m. US
Secretary of State Condoleezza Rice may be in Moscow, but she has Caracas on her mind. Ms. Rice, who arrived in Russia
Tuesday for talks with that country's leaders is "concerned" about some arms sales in Latin America, specifically Venezuela, reports Bloomberg News. The Russian government played
down US concerns by countering that any of its proposed arms deals with Venezuela are in line with international agreements
and international law. Prior to Rice's trip, the US State Department issued its own accusations saying that Venezuela's
purchase of 100,000 Russian Kalashnikov rifles, Brazilian helicopters and Spanish patrol boats, might find its way into the
hands of Colombian "insurgents." The Bush administration has also accused Venezuela President Hugo Chavez of having
a "poor human rights record and of meddling in the internal affairs of neighboring countries," reports Bloomberg.
Venezuela signed a $120 million contract for Russian military helicopters that includes attack, assault and transport
aircraft last month. The purchases are the largest for the country's armed forces since Venezuela's President Hugo Chavez
took office in 1999....
The arms are intended to beef up security along the Colombian border where kidnappings and
armed incursions by Colombian irregulars are common, Venezuela's information ministry said.
Venezuela is also studying
the purchase of Russian MIG-29s, the Russian press has reported.
For its part, Venezuela, the "Saudi Arabia of Latin American" maintains a heightened wariness about US foreign policy vis-a-vis its oil reserves, reports India Daily. Last week, Mr. Chavez celebrated the second
anniversary of a failed coup to overthrow his government by swearing in " commanders of a new military reserve" patterned after Fidel Castro's local militias, which Chavez says are "meant to deter aggression against his country," reports
the BBC.
Twenty-thousand reservists paraded before Mr Chavez at the main military barracks in Caracas. The new formation,
which the president wants to become a two million-strong force in the near future, will be directly under his command. The
move comes amid growing tension between Venezuela and the US.
Chavez claims the ultimately unsuccessful April 2002 coup was backed by US interests. Believing he will face
more such coups, Chavez has expanded his relations with Russia, China, India and Iran, says India Daily.
The oil asset of Venezuela makes it vulnerable. But China, India and Russia have interest in the same. [For Chavez]
that may make some difference. The BRIC alliance (Brazil, Russia, India and China) will oppose any invasion or external intervention
in Venezuela. It will be of interest to see how BRIC will defend its Venezuelan oil interests in case of a similar crisis.
Venezuela currently supplies the United States with over 15% of its oil, making the South American nation its 4th
largest supplier, after Saudi Arabia, Canada, and Mexico.
On related energy matters, Houston-based Citgo Petroleum Corp., owned by Venezulea's state oil company, PDVSA,
announced plans on Wednesday to sell two of its eight US refineries, reports the Houston Business Journal.
[Oil Minister Rafael Ramirez] reiterated previous assertions that Venezuela does not intend to sell all of Citgo's
assets, which include about 13,000 service stations in the United States.
Ramirez and Venezuelan President Hugo Chavez
have complained that Venezuela's contracts with refineries in the US are unprofitable for Venezuela and constitute a subsidy
for the US economy.
They have said the same thing about the country's production contracts with US and multinational
oil companies and have warned that all of these operating agreements will have to be rewritten with higher fees paid to Venezuela
and with greater control given to PDVSA.
Chavez has said he wants to diversify the client list for Venezuela's oil,
and in recent months he has struck a series of energy accords with neighboring countries, as well as China and Spain.
In his weekly live television show, Chavez called on fellow Venezuelans "to follow the example of Don Quixote" reports The CBC.
Let us all read Quixote to feed ourselves once again with that spirit of a fighter who went out to undo injustices
and fix the world," he said. 'To some extent, we are all followers of Quixote.'
Chavez's remarks came ahead of a planned
[one million book] giveaway of the novel. On April 23, free copies of the book will be given away by the Venezuelan government
in the country's public squares.
Quixote is the central character in Miguel de Cervantes' Don Quixote, the 17th-century work that is widely regarded as history's first novel. In the story, a would-be knight, depicted
as brain-adled from reading too many chivalric romances, travels the Castillian countryside righting imaginary wrongs. His
most famous battle is against imaginary giants which are, in reality, windmills. The knight of the woeful countenance is accompanied
by his faithful, more realistic servant, Sancho Panza. How much the dreamer, or realist, Chavez turns out to be remains
an open question. Source: The Christian Science Monitor
Venezuela To Oil Firms; Accept Sovereignty Or LeaveMon Apr 25, 2005 12:06 PM ET By Pascal Fletcher CARACAS, Venezuela, April 25 (Reuters) - Venezuela's government aims to reverse a
past opening to foreign oil investors it says hurt the nation, and it will not work with companies that do not accept its
energy sovereignty, Oil Minister Rafael Ramirez said Monday. In separate newspaper and TV interviews, Ramirez outlined
the fiercely nationalistic vision which has led left-wing President Hugo Chavez to recently order contract changes and tax
hikes for foreign companies operating in Venezuela. The message seems mostly directed at U.S. oil majors which were
the biggest participants in a wave of foreign investment in the world's No. 5 oil exporter in the 1990s, when previous governments
opened up the energy sector. Chavez, a fierce critic of Washington, has ordered a review of these 1990s oil contracts
he says have "robbed" the nation of income he wants to use to finance national development. Venezuela remains a major oil
supplier to the United States. "We're going to reverse this internationalization (of our oil sector) ... we're going
to reverse the opening," Ramirez said in an interview in the Caracas daily El Universal. In a move that alarmed investors
and analysts, Venezuela this month unilaterally ordered changes of terms and sharp tax increases for 32 oil field operating
agreements involving companies from the U.S., Europe and Asia. In October, Chavez hiked royalty rates for multibillion
dollar extra-heavy oil upgrading projects in the Orinoco Belt, which partner foreign firms with the state oil company PDVSA. These
1990s agreements and associations involve oil majors like U.S. Exxon Mobil (XOM.N: Quote, Profile, Research), ConocoPhillips (COP.N: Quote, Profile, Research), ChevronTexaco (CVX.N: Quote, Profile, Research), and French Total (TOTF.PA: Quote, Profile, Research), among others. "What we've told the American companies is ... we want a healthy relation, but we have the
full right to exercise our sovereignty in military, economic and above all oil matters," Ramirez told state TV. "We're
not ready to maintain a relation with any country -- even where there is a history of oil exchanges -- where we lose out,
a relation of a colonized country, of a country that surrenders its resources," he said. Ramirez said Venezuela wanted
"full oil sovereignty" and added, "If the companies understand this, then we carry on working. If they don't, then we are
not interested in working with them." BLOW TO INVESTMENT? At least one oil major, Exxon Mobil, has started talks
with the government over the Orinoco belt royalties increase in October. Some oil industry sources say the company might seek
international arbitration but the firm has not confirmed this. Analysts say the contract shifts and tax hikes could
wipe tens of millions of dollars off the investment portfolios of energy firms operating in Venezuela. Foreign companies
pump around 1.1 million barrels per day (bpd) of crude in Venezuela, including around 600,000 bpd from the giant Orinoco synthetic
crude projects and around 500,000 bpd through the operating contracts. Ramirez said 16 of the 32 operating contracts
the government had ordered changed over 6 months had recorded unacceptable losses. "They are an insult, an assault against
the patrimony of PDVSA and the nation," he told El Universal. Some analysts say Venezuela's aggressive drive to tighten
control over its energy sector could scare off future investors and damage plans to ramp up national oil output to 5 million
bpd by 2009. But Ramirez discounted this and said there was strong initial foreign interest to bid for new natural
gas acreage in western Venezuela. The minister said Venezuela was producing 3.1 million bpd. Most experts estimate
its output closer to 2.7 million bpd. © Reuters 2005 © Source: Reuters
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