Chávez seeks influence with oil diplomacy

According to Granier, the opportunity cost for the Cuban-Venezuelan oil "deal" alone is costing Venezuelans an estimated US$ 1.7 billion in 2005. In dollar terms, says the economist, this is equivalent to all US official aid to Latin America, including military and non-military disbursements.

Today, the US remains the top buyer of Venezuelan crude. Venezuela is still the third-largest foreign supplier of oil to the US, and owns CITGO, one of the largest refinery complexes and gas distribution networks in the US. But this could change. Chávez warned recently that the daily 1.5 million-barrel supply to US ports could be halted if US "aggressions" against his government continue. "Ships filled with Venezuelan oil, instead of going to the United States, could go somewhere else," he threatened at a World Youth Day event on Aug. 14 in Caracas. "The US market is not indispensable" for Venezuela, he said.

A week after Chávez made these comments, Venezuela announced plans to expand its fleet of oil tankers to diversify its client base and sell more crude to Asia and other faraway markets. Asdrubal Chávez, head of PdVSA's shipping and sales, said $2.2 billion would be invested over the next seven years to expand the fleet from 21 to 58 tankers. Eulogio Del Pino, a PdVSA director, said Venezuela would open its first office in Asia - in Beijing - "in coming days."

Reflecting perhaps the tension between Chávez and the US, religious broadcaster Pat Robertson suggested this week that the US "take out" Chávez to stop Venezuela from becoming a "launching pad for communist influence and Muslim extremism." Secretary of Defense Donald Rumsfeld immediately distanced the administration from his comments, even as Chávez's vice president described Mr. Robertson's remarks as a "terrorist statement."

Meanwhile Chávez is picking fights with foreign oil companies - including Shell, ExxonMobil, Repsol YPF, Chevron, BP, and Total that have been working in Venezuela for years. Thirty-two publicly traded oil companies are accused of owing Venezuela $4 billion in back taxes for overproduction - something they deny. This follows Venezuela's hikes in production royalties from 1 percent to 16.7 percent in October, hikes in taxes on operating agreements from 32 percent to 50 percent in April, and a declared end to contracted dollar payments to foreign oil field operators in May. "The desire to operate in Venezuela," Kyle Cooper, energy analyst for Citigroup Global Markets said in a report last week, "is fading fast."

The US is not alone in its concern over Chávez's oil diplomacy. An increasing number of Venezuelans, according to Alfredo Keller, an independent pollster in Caracas, are also watching events unfold nervously.

"Sure, Chávez is becoming a major regional force," says Mr. Keller, "...but he is losing popularity at home." According to national polls Keller conducted in July, he found 75 percent of Venezuelans against the favors and generosities Chávez is showering on other countries. "Venezuelans don't like their resources going to foreigners," says Keller. "At home problems such as cost of living, housing, unemployment, remain unchanged ... and people are wondering: Whose leader is he?"

Page: 1 | 2 | 3