Venezuela in US$2 billion deal to buy crude oil from Russia

[corporate_mike]

Russian MosNews: Venezuela, the world’s fifth-largest oil exporter, has struck a $2 billion deal to buy about 100,000 barrels a day of crude oil from Russia until the end of the year, the British Financial Times reported Friday.

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Why is Chavez buying oil from Russia?

[DS1]

1. Protection money

[McCamy Taylor]

8. Good thinking.

[htuttle]

2. I'd imagine it was the light, sweet stuff?

I think most of Venezuela's oil is "sour" (sulfurous, needs extra refining for most purposes).

[leftchick]

4. how could we know?

without a link?

[leftchick]

3. do you have a link?

please? It would be nice to read it in context.

[Spider Jerusalem]

5. Link from Financial Times:

Venezuela buys Russian oil to avoid defaulting on deals
By Andy Webb-Vidal in Caracas
Published: April 28 2006 03:00 | Last updated: April 28 2006 03:00

Venezuela, the world's fifth-largest oil exporter, has struck a $2bn deal to buy about 100,000 barrels a day of crude oil from Russia until the end of the year.

Venezuela has been forced to turn to an outside source to avoid defaulting on contracts with "clients" and "third parties" as it faces a shortfall in production, according to a person familiar with the deal. Venezuela could incur penalties if it fails to meet its supply contracts.

<snip>

The move suggests a growing gap between Venezuela's declining domestic output and its expanding contractual obligations to international customers.

Luis Pacheco, a former planning director of PDVSA, said: "Why would Venezuela be buying crude oil from Russia? I would imagine it would be to meet obligations for light oil deliveries, but they are relatively small. Most of PDVSA's obligations are for heavy oil."

Full story here: http://news.ft.com/cms/s/1d5dfe3a-d653-11da-8b3a-0000779e2340.html

[Commie Pinko Dirtbag]

7. Hmmm. I see lots of speculation in that article.

The only hard fact it says is PDVSA owns 50% of a refinery in Germany.

The "spy" tone of that article made wavy lines to come out of my head.

[Spider Jerusalem]

9. It seems the only hard fact they have...

is that Venezuela is buying Russian oil. Everything else seems to be geared towards implying that Chavez is a failed leader who's damaging his country's economy and poorly managing its resources, brokering deals he can't come through on for power and influence with leftist radicals (which slant is probably as much a function of the paper's clearly pro-corporate capitalist leanings as anything else). If I'd found a better link I would have posted it.

[happydreams]

6. Maybe trying to diversify his economic base. I'd rather have

Chavez controlling a broad spectrum of oil products than our fascist chimp prez.

Democratic Socialism is the way to go!

[cliss]

10. There is something peculiar about this

if it's true. Russia sells most of its oil to Europe. I believe Europe buys from 2 sources; Russia and Iran. They buy a little bit from Western Africa.

Something's up. Europe is desperate for more oil. Their price per gallon is almost twice what it is here. Last winter, there was a problem with heating oil. Hundreds of people died, in Russia & Poland.

Any ideas on why they would do this?

[corporate_mike]

11. Chavez is cutting back his own production and buying from Russia

to drive global oil prices higher

[Commie Pinko Dirtbag]

12. Dude. It's no use.

It's gone to the point where, if you say Chavez is a carbon-based lifeform, people here wonder about the veracity of the statement.

I wonder why.