Venezuela halts US dollar cost payment to oil firms
Sun May 15, 2005 05:20 PM ET
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By Pascal Fletcher
CARACAS, Venezuela, May 15 (Reuters) - Venezuelan President Hugo Chavez on Sunday tightened a nationalist squeeze on overseas oil companies by ending contracted U.S. dollar cost payments to foreign oil field operators in his country.
The left-wing populist leader said the prohibition was part of a campaign to overhaul foreign energy contracts signed by previous governments, which he said were sucking oil income from Venezuela, the world's No. 5 petroleum exporter.
"They've been robbing us, looting us" Chavez said in a television broadcast.
He added that oil field operating contracts in the 1990s included clauses under which state oil company PDVSA was obliged to pay foreign partners in dollars for local costs like work clothes, vehicles, food and other expenses.
"PDVSA is now prohibited from doing this. I prohibit it," Chavez said.
"And if someone wants to sue me, let them," he added, shrugging off the possibility that his government might face legal action over alleged contract breaches.
"From now onwards, we won't be paying a cent in dollars (of costs) to these transnational companies," he said, without identifying individual contracts or giving figures.
This year, Chavez has already increased income tax for oil field operating contracts held by companies from the United States, Europe and Asia.
Venezuela is one of the leading oil suppliers to the United States and U.S. oil majors like Exxon Mobil (XOM.N: Quote, Profile, Research) , Chevron (CVX.N: Quote, Profile, Research) , and ConocoPhillips (COP.N: Quote, Profile, Research) paid big bonuses to win oil projects before Chavez was first elected in 1998.
"OIL VAMPIRES"
Chavez said his drive to restore Venezuela's "oil sovereignty" had earned him the enmity of U.S. President George W. Bush, whom he called "Mr. Danger."
"That is why Mr. Danger doesn't want us," he said.
Although Venezuela continues to sell more than half its oil exports to the United States, the Venezuelan leader has frequently accused Bush's government of plotting to overthrow or kill him to seize control of his country's oil.
"That's why they invaded Iraq ... they're desperate for oil, they're like oil vampires," he said. U.S. officials have dismissed these accusations as "wild" and "ridiculous."
Chavez this year ordered that 32 oil field operating contracts signed between 1992 and 1997 be converted into joint ventures under Venezuela's 2001 Hydrocarbons Law.
This law foresees higher royalty payments and gives the state a controlling 51 percent stake.
Late last year, Chavez also unilaterally increased royalties on big foreign-financed extra-heavy oil upgrade projects in the Orinoco Belt.
Industry analysts say the government's nationalist energy policy could hurt future investment and hamper PDVSA's plans to increase output.
They say Venezuela has not fully recovered from an anti-government strike more than two years ago that briefly slashed oil production and exports. They put current output at around 2.6 million to 27 million barrels per day (bpd).
The government says it is above 3 million bpd.
Chavez said industrialized nations should reduce their "unbridled" energy consumption or face a global energy crisis.
"There are no oil reserves any more in the United States, Middle East reserves are decreasing and our reserves are the world's biggest," he added, without offering figures.
He has recently accused foreign spy services and oil majors of masterminding what he calls a campaign of sabotage and vandalism against western Venezuelan oil installations.
But his critics and many industry experts say this is just a smokescreen to conceal corruption and inefficiency in PDVSA.
Rogue
