ExxonMobil no longer welcome in Venezuela

[quaoar]

No link yet, just moved

By NATALIE OBIKO PEARSON
AP Business Writer

CARACAS, Venezuela (AP) — Venezuela’s oil minister said Wednesday that Exxon Mobil Corp., the world’s second-largest integrated oil company, was no longer welcome in this oil-producing nation.

Exxon Mobil has resisted tax increases and contract changes that are part of a policy by President Hugo Chavez’s government to “re-nationalize” the oil industry.

Rather than submit to new terms that will turn 32 privately run oil fields over to state control, the company sold its stake in the 150,000 barrel-a-day Quiamare-La Ceiba field to its partner, Spanish-Argentine major Repsol YPF, to avoid accepting the unfavorable terms in December.

“There are some companies that prefer to leave” than accept the policy changes, Oil Minister Rafael Ramirez said in an interview with the state-run TV broadcaster. “Exxon Mobil ... preferred to sell to Repsol, its partner in the agreement, rather than adjust.”

[0007]

1. Is the squeeze on? Does this mean higher prices at the pump?

[TomInTib]

3. Oh, just wait 'til summer.. n/t

[Bassic]

9. If the CEO catched a cold,

they'd use it as an excuse to hike prices. So yeah, they're definitely go up.

[wordpix]

14. repukes will be screaming at their Big Oil puppeteers to keep prices low

so they can be voted in again. If prices are high this summer, people will be blaming repukes in Congress AND Big Oil.

[northzax]

2. seems reasonable

rather than having their property confiscated, they sold it. wouldn't you?

[mazzarro]

6. Where did the it say anything about confiscating properties?

Getting the whole picture of the issue might be more beneficial to all than to prejudge an issue because of your biases.

[Bacchus39]

10. um....right here

"Rather than submit to new terms that will turn 32 privately run oil fields over to state control, the company sold its stake in the 150,000 barrel-a-day Quiamare-La Ceiba field to its partner, Spanish-Argentine major Repsol YPF, to avoid accepting the unfavorable terms in December."

[bemildred]

17. "sold its stake" is not "confiscated". nt

[northzax]

23. they sold before the fields were nationalized

nationalization is roughly equivalent to confiscation.

[Bacchus39]

26. it is confiscation

n/t

[northzax]

28. not really, I take back my use of words

the companies were run under contract, they were never technically owned by EM. you can't confiscate something that already belongs to you, you can, however, nationalize the operations. minor, semantic difference, sure, but words matter.

[alcibiades_mystery]

48. Thank you...was about to correct that

The article writer makes it as difficult as possible to extract the actual arrangement, and as easy as possible to imagine this as the outright confiscation of ExxonMobile's supposed property. One has to read the sentence pretty carefully, given the ideological baggage that has been thrown at the Chavez government, to pick out "privately run" and "state control" and distinguish that from the privately owned suddenly being state owned.

[northzax]

51. what we don't know

from this article at least, is the terms of the contracts in question. and to be fair, the Chavez government throws just as much crap as gets thrown at them. the only relevant fact we have is that a huge multinational corporation decided that under the terms offered, there was more money to be made selling out than continuing to do business in Venezuela.

[alcibiades_mystery]

55. Not necessarily

Perhaps they simply thought that the hassle and insecurity outweighed the projected profits, or perhaps they wanted to send an ideological message. Corporations are perfectly capable of making local decisions based on non-financial factors. So, we don't know on what basis they decided, whatever their public comments on that might be.

[Judi Lynn]

29. Venezuela's oil was nationalized in 1973.

From a BBC timeline:

1973 - Venezuela benefits from oil boom and its currency peaks against the US dollar; oil and steel industries nationalised.

1983-84 - Fall in world oil prices generates unrest and cuts in welfare spending; Dr Jaime Lusinchi (AD) elected president and signs pact involving government, trade unions and business.

1989 - Carlos Andres Perez (AD) elected president against the background of economic depression, which necessitates an austerity programme and an IMF loan. Social and political upheaval includes riots, in which between 300 and 2,000 people are killed, martial law and a general strike.

1992 - Some 120 people are killed in two attempted coups, the first led by future president Colonel Hugo Chavez, and the second carried out by his supporters. Chavez is jailed for two years before being pardoned

1993-95 - Ramon Jose Velasquez becomes interim president after Perez is ousted on charges of corruption; Rafael Caldera elected president.

1996 - Perez imprisoned after being found guilty of embezzlement and corruption.

1998 - Hugo Chavez elected president.

http://news.bbc.co.uk/1/hi/world/americas/country_profiles/1229348.stm

[northzax]

33. so when the Venezuelan oil ministry

said that they were going to return 32 fields to government operation, away from private operation, what would you call that, exactly?

[primavera]

40. So if I own an apartment and rent it to you...

... and I subsequently decide I want to live there again myself so ask you to vacate my apartment, or I want to increase the rent and you decide you'd rather leave than pay the higher rent, what's so sinister about that?

[northzax]

43. well, when you sign a year's lease with me

and change the terms at the six month mark, what's so sinister about that?

[primavera]

45. Agreed, that would be breach of contract

I guess what I don't know in this circumstance are the specific details of any such contract that may or may not be in force. If there is a contract and it allows the parties to made amendments at specific intervals, there may not be anything wrong at all with this, that's all I'm saying.

[northzax]

50. nothing wrong at all

the State either changed the contracts unilaterally, or within the terms of the contracts. either way, ExxonMobil decided there was more money to be made elsewhere. As a publically traded company, it is the job of ExxonMobil to make as much money as possible. they have decided the best way to do that is by leaving Venezuela, that is their choice. whatever.

[northzax]

57. I don't think there's anything wrong with any of it

governments abrogate contracts all the time, for a hundred reasons (Dubai Ports World, anyone?) Much the same situation, the government basically forces a change in contract terms, which is their right, as the government. and the company basically says 'fuck this, we don't want to business with these assholes' and goes home.

[stevekatz]

35. When the world

gets over it's oil addiction, Venezuela is going to go down the tubes.

[Demeter]

41. Not Necessarily

I Venezuela continues to invest its oil revenues in its people's well-being and national infrastructure, they will be in better shape than most places, including especially us.

We are eating our seed corn and shipping the compost overseas--figuratively speaking. Making a desert out of a garden.

[NickB79]

42. When the world gets over it's oil addiction

We'll all be living like it's the 1800's again. I doubt we'll be much better off than Venezuela at that point.

[bemildred]

31. Confiscate :

\Con"fis*cate\ (? or ?; 277), v. t. (imp. & p. p.
Confiscated; p. pr. & vb. n. Confiscating.)
To seize as forfeited to the public treasury; to appropriate
to the public use.

It was judged that he should be banished and his whole
estate confiscated and seized. --Bacon.

Sold :
adj : disposed of to a purchaser; "this merchandise is sold" (ant:
unsold)

Both here.

[Bacchus39]

24. let me repeat that

"Rather than submit to new terms that will turn 32 privately run oil fields over to state control..."

[ronnie624]

52. And your point is... n/t

[bemildred]

44. Exxon sold its holdings because it chose not to comply with

Venezuelan law, and it's nice to see a large corporation made to comply with the law, one sees it so rarely.

[tkmorris]

7. I would, if that were the case

But since in this case you are just talking out of your hat, it's moot.

[northzax]

12. so the article is lying?

I'm not so good at the reading, but it sure seems to say something a lot like:

"Rather than submit to new terms that will turn 32 privately run oil fields over to state control, the company sold its stake in the 150,000 barrel-a-day Quiamare-La Ceiba field to its partner, Spanish-Argentine major Repsol YPF, to avoid accepting the unfavorable terms in December."

what am I missing? do explain.

[rman]

16. I think the point is, Exxon could still make profits

if they'd accept the new terms and stay - i think the problem they have with it is that they would make less profits.

Also i doubt that under the previous contract Exxon actually "owned" those oil fields, it's not like those sites were little islands of 'Exxon-land' within 'Venezuela-land' - rather Exxon used to run/control those fields.

[northzax]

22. the contracts were abrogated

the government changed the terms of the contracts in mid-swing. Sure, ExxonMobil could have stayed and made money, but why do business with someone who changes the rules mid-stream? It's easier to sell out and leave. It's a business, if they thought they could make money, they would stay and make money.

[rman]

30. Do you think Exxon could make money under the new regulations or not?

You seem to be contradicting yourself.

Governments change regulations all the time- usually in favor of corporations, as a result of corporate lobbying.
In Venezuela other forces are at work: the will of the people.

Aside from that, i think it can be argued that the right to self-determination of any nation-state outweighs any right to maximizing profits that corporations seem to think they have.

It used to be that corporations were chartered explicitly for the purpose of benefiting the society from which they have sprung in the first place - making profit used to be a means to that end.

[northzax]

32. hey, Venezulea can do whatever it wants to

and ExxonMobil can decline to do business with them. How is that insulting to the country, somehow?

Sure, maybe they could have made money, I'm not an oil and gas engineer, but they obviously felt they could make more money by selling and not doing business there. Which is their right as well. Why is this a problem for anyone?

[rman]

36. Did i say Exxon is insulting Venezuela? No i did not

You're not putting words in my mouth now are you?

This sub thread started out with you claiming that Venezuela has Exxon's "property confiscated". I think i have sufficiently refute that claim.

Since that you have changed the topic to me supposedly claiming that it is a problem that Exxon doesn't want to do business with Venezuela - which i never claimed. I think we are done.

[northzax]

37. and I corrected the confiscated remark above

it has been nationalized. Same difference, really. In mid contract, the government offered a new deal, at less favourable terms than the last deal. ExxonMobil wisely, in my opinion, walked away.

look at it this way. your landlord tells you, mid lease, that you are now moving to a different, smaller apartment, which will cost you more money. Wouldn't you leave under those circumstances?

[ronnie624]

53. You did indeed sufficiently refute the posters claim

of "confiscation". I am still awaiting proof that Venezuela "changed the terms of the contracts in mid-swing".

The judgment of some seems to be impaired by ideologically motivated hatred. They seem unable to grasp the fact that Venezuelan land belongs to Venezuela and not Exxon Mobil. Strange.

[alcibiades_mystery]

56. Venezuela basically declared contracts illegal under a hydrocarbon

law passed in 2001.

The contracts were entered into under the former government, which was corrupt and crony-laden, filled by the Venezuelan oligarchs, who made money for themselves and let the poor of Venezuela rot, despite the explicit purposes of PDVSA. It is quite likely that contracts were unconscionable, and the hydrocarbon law was the only means of stopping a corrupt contract entered into by a corrupt government. These were operating agreements, byt the way, and it is damn near impossible to find a press account detailing what, exactly, about the operating agreements was illegal (a little business history and legislative history on this matter would actually constitute good journalism, though that has never been practiced by the likes of profesional ideologist Juan Forero, the NY Times anti-Chavez man-on-the-scene, so don't expect it any time soon).

From EM's perspective, these contracts were entered into when oil was cheap, and now that oil is expensive, the Chavistas are just shaking them down, period. These are your options.

[tsuki]

46. But, but, could they have made 10b a quarter? nt

[leesa]

34. Nobody is confiscating their property. EM doesn't OWN the property

It's privately RUN. The state would run it instead. What is confiscated?

[northzax]

38. see post 28

for clarification of terms. what was nationalized were ExxonMobil's contracts to operate certain fields that they had long term contracts to run. So they chose to sell out, rather than sign a new contract with a country that had just arbitrarily cancelled the previous contracts. Wouldn't you?

[alcibiades_mystery]

49. I think the analogy could be said to work more like this

Two brothers inherit an apartment building from their father, provided that they use the rent money as a trust fund for the family's welfare. One brother locks the other up in a basement prison, and proceeds to rent out the apartments under long-term leases to cronies who pay him directly, and he sends none of the money to the family trust fund. The brother who is locked up escapes, and sends his corrupt brother packing. Ah, what to do with these leases. Essentially, they are unconscionable lease agreements entered into under the most dubious of arrangements. Moreover, the family, which was supposed to be provided for in the first place, is currently in poverty as a result of the corrupt brother's actions. So, the escaped brother goes to the cronyt tenants and demands that a new arrangement be made, mid-lease as it were. The crony tenants can shit or go sail, and they go sail, their cozy and corrupt arrangement with brother one having reached the conclusion of its usefulness to them.

(Needless to say, it is more complicated than all this, but it is also more complicated than the simple "landlord-lessee" analogy you posted above. The hydrocarbons law can be seen two ways: 1) as a money-grab after legitimate businesses did the lion-share of the discovery work, or, alternately, sunk the lion-share of resources when oil prcies were cheap OR 2) as a redress of contracts entered into under the previous regime with no view towards the welfare of the Venezuelan people as a whole. Both these way sof looking at the law are borne out by the facts of the case, and it is really only ideological position that would determine, at the end of the day, between them. But pretending either one is the obvious "truth" is ideological mystification at its finest.)

[C_U_L8R]

4. I guess this means another invasion

coming soon

[quaoar]

5. OK, here's a link

http://www.centredaily.com/mld/centredaily/business/14217173.htm

[Ian David]

8. This is the real reason Bush hates Chavez. OIL! n/t

[wordpix]

15. you got it!

[bemildred]

11. The quote does not support the headline.

“There are some companies that prefer to leave” is not at all the same as "ExxonMobil no longer welcome in Venezuela".

[quaoar]

13. The headline is drawn from a quote further down in the story

"We said we don't want them to be here then," Ramirez said. "We have many partners, many capabilities and many countries that are willing to manage our resources with us."

[bemildred]

18. There is nothing that says "not welcome".

The clear meaning is that Exxon is leaving because it does not wish to follow Venezuelan law. It is equally clear that Exxon would be welcome in Venezuela, were it willing to follow Venezuelan law.

[quaoar]

19. 'we don't want them to be here'

If someone doesn't want you around, you are not welcome.

[bemildred]

20. "then."

[quaoar]

25. Then they aren't welcome

[HeatherDawn]

21. Venezuela and Iran have both threatened to accept only Euros

for their oil, as did Saddam before we invaded. THAT IS WHY WE ARE AT WAR!!!!!!!!!!!!!!!!



http://www.house.gov/paul/congrec/congrec2006/cr021506.htm

[The Backlash Cometh]

27. Exxon Mobil will probably send Chavez a message.

Does anybody want to bet on a carpet of bombs?

[cleofus1]

39. ok maybe i'm a hypocrite

but i'm a capitalist...and i don't mind if big oil gets the back hand on the down low...i say let the people of Venezuela work it out...

[Blue_Tires]

47. ttt n/t

[JohnnyJ]

54. Looks like Mr. Chavez just accelerated his assassination date.....

the corporatists will be up his ass soon enough.....