Tag Archives: Chavez

What’s Next For Venezuela’s Oil?

What’s Next For Venezuela’s Oil?

Hugo Chavez left his cherished Venezuela rich with oil, but the country’s role as a major oil power has diminished over the last years mostly due to Chavez’s efforts to use oil revenues for political domination, anti-American activities and domestic social programs. The state-owned oil company PDVSA’s production fell by a quarter during Chavez’s reign and it remains to be seen whether the next regime will change course. The global oil industry waited impatiently for the Venezuelan strongman to die, hoping that the next leader would focus on developing rather than exploiting the massive oil reserves. Nationalisation of Venezuela’s oil industry intimidated foreign investors, but Chavez’s passing might change everything. However, it will take time to free the country from the power structure that was erected in the last 20 years.

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A New Era of Prosperity for Venezuela?

A New Era of Prosperity for Venezuela?

The death of Venezuela’s thuggish tyrant, Hugo Chavez instantly led to speculation over the country’s future as a top oil exporter. Venezuela’s oil exports have been decreasing since 2000 when the country was exporting three million barrels per day to 1.7 million barrels in 2011.

Chavez essentially nationalised the country’s oil fields to fund whacky social programs, but failed to reinvest in new oil fields and substitute dwindling ones. It will be interesting to see if Petroleos de Venezuela, S.A will manage to lure - or even accept - more investments from abroad following Chavez’s passing. It’s possible that Chavez’s death will spur a new era of pragmatism within the country’s largely socialist leadership.

Chavez, who once referred to George W. Bush as the devil, might have done his beloved Venezuela a huge service by dying young and thus putting an end to the socialist experiment. Ironically, the despotic leader got a chance to meet the devil much before W’s eventual ascent to the pearly gates.

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The Death of a Tyrant

The Death of a Tyrant

The president of Venezuela, Hugo Chavez died on Tuesday after a long battle with cancer. For many Venezuelans, Chavez was an oppressive tyrant with very little toleration for free speech while others lauded him as the champion of the poor and wretched. Reactions across the globe varied, Iran and Cuba expressing their deepest condolences while many Western leaders showed indifference to Chavez’s passing while simultaneously expressing support for the Venezuelan people. Throughout Chavez’s political career, U.S Congress showed deep hostility towards the self-proclaimed leader of the anti-American opposition. What Chavez’s death means for oil prices is an interesting question. Venezuela, which sits on the world’s second-largest oil reserves, might struggle with oil production in the near future.

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No Oil No Chavez

No Oil No Chavez

Oil rich states seem to have a knack for letting mad men run their countries to numerous face-offs with countries that these self-appointed maniacal despots deem as representing all the ills of the world. The tragicomic regime of Venezuela’s Hugo Chavez is thriving because a country with massive natural resources seldom requires a middle class or constituency which demands accountability; as Fareed Zakaria famously coined, no taxation, no representation.

Now, after spending two months out of public life due to cancer surgery, Chavez’s homecoming from a hospital in Cuba was celebrated by his government on Monday. The US is one of Venezuela’s most important clients, regardless of Chavez’s fiery and often senseless demonisation of US political leaders. Like with parenting, too much of a good thing is the reason for spoiled children and Dr. Doom type leaders like Chavez. Enormous resources of the world’s most sought-after commodity can turn any self-appointed leader into a megalomaniac with a serious messiah-complex.

Oil prices will continue to stay high until repressive regimes stop blackmailing the free world and give up on nationalisation attempts. Until then, supply and demand will forever be damned to an unnatural realm while the citizens in oil-producing states will be incessantly spoiled by false notions of comfort.

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Oil Production Facilities

Quo Vadis Oleum Si Chavez It?

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Venezuela, one of the biggest global oil producers, is facing growing uncertainty as President Hugo Chavez is battling serious post-cancer surgery complications in Cuba a few days before he is slated to be sworn in for an unprecedented third term in office.

Chavez transformed a struggling democracy into a struggling police state and now holds the keys to the country’s massive oil production facilities. Where Chavez’s regime goes, there goes oil.

Chavez mandated majority PDVSA (Venezuelan state-owned oil and natural gas company) ownership of all international oil projects and in 2006, he applied the nationalization of oil exploration and production in Venezuela. Statistics reveal that Venezuela’s petroleum exports fell by nearly 50 percent since hitting 3.06 million barrels per day in 1997.

After coming into power, Chavez fired a large percentage of PDVSA workers who did not support him and, as a result, the state-owned oil company lacked funds and talent to maintain steady production. He further complicated things by seizing assets of foreign oil companies that were the main contributors to Venezuela’s production growth.

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