Wednesday, April 05, 2006

Driving out Investors?

Chavez has opted for taking a hard line policy with the oil companies - either you pay me 80% royalty or get out. I'm assuming he was hoping for the 80% royalty, and maintaining the output of barrels constant.

However, after he slapped Exxon with a $2 billion invoice on back taxes, Exxon opted out and sold its share to PDV, formerly PDVSA. Statoil, followed Exxon and also sold its share to PDV.

Now he has kicked out two European companies - ENI (Italian) annd Total (French).
the attacks against Total and ENI come as somewhat of a surprise given the steady relations Venezuela maintains with France and Italy. In a statement issued on Monday, ENI said the government "unilaterally" removed it from the Dacion area where it was producing 60,000 barrels a day. The Italian company said it would seek legal redress, while the government promised to fight any lawsuits
Don't hold your breath for the lawsuits, ENI. I guess this will wake up Europeans as to who Chavez is and what he wants. Additionally, I'm curious as to who now will run both sites, and if PDV will be capable of absorbing all this production.

The article states that Venezuela is looking for foreing investors with no ties to the USA such as Iran, China and Russia. But you have to wonder, if making such a show of force, won't scare other investors away.

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