Venezuela said it planned to increase its heavy crude production to 1.6 million barrels a day by 2010. That deadline passed nine years ago. Before U.S. sanctions took effect this January, the country was only producing 1.1 million barrels a day in total, according to OPEC. Here's a flashback to PDVSA's optimistic plans long ago, part of a series of articles I wrote in 2005 for the Daily Journal in Caracas and am re-publishing here.
PDVSA to boost output
By Jens Erik Gould
June 28, 2005
MARACAIBO - Luis Vierma, vice president of production and exploration for state-run Petroleos de Venezuela (PDVSA), said on Tuesday that heavy crude production in Venezuela would rise by 1 million barrels per day (bpd) by the year 2010.
Part of the increase would come from a heavy crude project in San Cristobal, which Vierma said would be producing 400,000 bpd by 2008. PDVSA President Rafael Ramirez would soon outline the company's strategy for developing the Faja del Orinoco as well as announce new projects accounting for the rest of the production increase, Vierma said.
Vierma made the remarks in a keynote address at the opening day of the Latin American Petroleum Show in Maracaibo. Ramirez - who doubles as the energy and petroleum minister - cancelled his appearance at the event, apparently due to the Petrocaribe meeting in Puerto la Cruz.
The PDVSA vice president told reporters after his speech that Indian Oil company was evaluating a possible joint venture in the San Cristobal project. He added that the deal with India's state-run oil company was only a possibility at this point, since the Indian company has voiced a preference for lighter crude fields. "The Hindus have their preferences," he said.
He said PDVSA was open to discussing partnerships with other foreign companies as well, but offered assurances that the company also had the technological expertise to launch the project alone. "We are open to any type of negotiation," he said.
According to Vierma, PDVSA has already drilled a series of wells at the San Cristobal project, which is north of Cerro Negro in the Faja. The state oil company will either create a blend and sell the crude at 16 API, or send the heavy crude to refineries that are still in the planning stages, he said.
Vierma said PDVSA was in the process of determining the cost of the San Cristobal project, and added that the wells were "relatively inexpensive." Current heavy crude production is estimated at 600,000 bpd.
The vice president also praised the recent construction of the first Venezuelan-made platform, which was intended for use by ConocoPhillips in Corocoro in the Gulf of Paria.
Regarding the Rafael Urdaneta project in Paraguana, Vierma said PDVSA would receive bids from 30 companies for exploration in September. The bidding would be carried out "without a day of delay," he said, even though analysts have previously expected bidding to end in July. The project consists of 29 blocks in the Gulf of Venezuela and 11 in Falcon.
"Massive" maintenance plan
PDVSA will also launch a "massive well maintenance program" in Lake Maracaibo, which has over 10,000 wells, Vierma said. The project will include improvements to the mechanical structure of wells and to gas injection plants, some of which are 50 years old.
The two main goals of the project were to save natural gas and to increase crude production, he said.
Critics have said there is a severe lack of upkeep and investment in the area. Valeria Luti, director of finances for Convalsa construction company in Zulia state, told The Daily Journal that the lack of maintenance of wells in Lake Maracaibo was responsible for falling production levels.
She said that the decrease in PDVSA investment had caused many service companies in the area to close up shop, although Convalsa revenue had improved slightly in 2005.
PDVSA aims to launch the maintenance project in phases and anticipates that it will last five to six years, he said. The cost of the project is currently being evaluated. "We don't want to consider (sources of financing) is if it is not necessary," he said.
In other news, ChevronTexaco's Latin American president Ali Moshiri told reporters that the company would present a plan in January 2006 to open heavy crude production in the Faja del Orinoco. Moshiri said the company would share the venture with the Spanish company Repsol and PDVSA.
This is part of a series of re=published articles I wrote in 2005 for the Daily Journal in Caracas.
May 11, 2005
Gaston Parra Luzardo, president of the Venezuelan Central Bank (BCV), wants to allocate a portion of excess international monetary reserves to a National Development Fund. How the government proposes to access the funds, however, is uncertain.
"The Constitution establishes that profits gained by the export of hydrocarbons must be designated for real productive investment, to health and education," Luzardo said at the Federal Legislative Palace on Wednesday.
Luzardo spoke at the presentation of a book titled "Excess Reserves," which promotes the use of reserves, organized Wednesday by the National Assembly's (AN) Permanent Finance Commission. The commission's proposal would devote oil export profits to the National Development Fund, which would then finance social and economic development.
The BCV president backed a proposal to take a percentage of export profits before they are converted into reserves, deviating from President Hugo Chavez' proposal Sunday that funds be taken directly from the central bank's reserves. Luzardo declined to comment on the president's proposed reserve limit.
Rodrigo Cabezas, commission president, did say putting a limit on the reserves was one of the three approaches being considered. The government could also reform the Central Bank Law allowing the decentralization of excess reserves, or follow Luzardo's proposal to take profits from Petroleos de Venezuela (PDVSA) before they reach the bank.
"It doesn't make any sense to Venezuelans to have an excess accumulation of reserves," said Cabezas to journalists after the presentation. He said that if no action was taken, the BCV would have $33 million in international reserves by the end of the year.
Cabezas added the commission's intent to present a proposed bill to the Assembly and open the topic for debate in June.
AN President Nicolas Maduro, of the ruling Fifth Republic Movement (MVR) opened the presentation and voiced his support.
"Institutional and legal arrangements are required to allocate excess reserves to increase investment in the real economy, creating jobs and competitive industries, and closing the gap of inequality that condemns thousands to lives of poverty," Maduro wrote in the book.
Critics have denounced the plan to tap reserves on grounds that the government has not accounted for its spending and that excess reserves prevent the devaluation of the Venezuelan currency.
Opposition Deputy Freddy Lepage, president of the AN's Economic Development Commission, said Tuesday that Chavez's plan to "put his hand" in the international reserves would devalue the Bolivar, an Assembly press release said.
Former BCV official Jose Guerra also criticized the government proposal. "The price of oil at $40 should be sufficient to meet social needs and grant subsidies, but don't touch the central bank," he said on Tuesday.
But Cabezas cast off claims that the government already has sufficient funds for public spending. He said it was a challenge to address the Bs. 69 billion budget, which included 10 billion in public administration costs and 3 billion in university costs. He also discarded criticism that the extra funds would go into the pockets of the president and his party.
Cabezas invited anyone with a constructive idea to join the debate. "I yearn for, I hope that the opposition will come out and tell us, 'we want to work constructively, what kind of controls can we put into place that will serve all Venezuelans,'" he said.
"Excess Reserves," published by the AN's Finance Commission, cites economic studies and examples from other nations that promote spending international reserves. Maduro, Cabezas and Luzardo participated in a "baptism" of the book, in which they covered the book in rose petals.
Cabezas assured journalists that tapping export profits would not get in the way of the Central Bank's duty to back the value of the Bolivar currency, pay external debt and assure there is enough money for imports.
He also said lawmakers would be careful not to hurt the Venezuelan economy or provoke inflation. He said the Finance Commission wanted to reduce inflation to 15 percent by the end of this year, and bring it to 10 percent by 2006.
Internal investment such as spending on social programs was the key to increasing Gross Domestic Product (GDP), which the commission aims to increase by 8 to 10 percent, he said.
While internal investment currently accounts for 8 percent of GDP, Cabezas said the government aimed to raise the figure to 20 percent by 2010. He said this was nothing new for Venezuela, which he said devoted 25 percent of GDP to investment in the 1960's.
Cabezas said the finance commission, the Deposits Guarantee and Banking Protection Fund (Fogade), and members of the central bank have worked for the past six months to produce the current proposal.
The recognition of Juan Guaidó as Venezuela's interim president by the U.S. and many Latin American and European nations is an overt move to remove Nicolas Maduro from power. But U.S. efforts at regime change in Caracas were not always so apparent.
The government of Hugo Chavez repeatedly accused the Bush administration of supporting the failed coup against it in 2002. In 2005, I wrote a piece for the Christian Science Monitor on funding given to Venezuelan groups by a little-known and opaque branch of the US Agency for International Development (USAID) called the Office for Transition Initiatives (OTI).
"The [Bush] administration's nation-building mission includes trying to weaken or challenge the Chávez administration," Riordan Roett, director of Latin American studies at Johns Hopkins School of Advanced International Studies in Washington, said at the time. "OTI is really at the front line of what the administration thinks of Venezuela."
You can read the entire piece here: Democracy's 'special forces' face heat
This is part of a series of re=published articles I wrote in 2005 for the Daily Journal in Caracas.
June 7, 2005
Energy and Petroleum Minister Rafael Ramirez denied reports in the local press that Petroleos de Venezuela (PDVSA) planned to transfer Orimulsion production contracts to China, El Universal's website reported.
"We're not giving up the management of the business to anyone," said Ramirez on Monday in a press release. The minister, who is also president of PDVSA, added that the contracts obligate Chinese companies to pay royalties on production.
Orimulsion is a patented bitumen-based synthetic combustible that is derived from extra heavy crude oil in the Orinoco belt and is used for commercial boiler fuel in power plants worldwide.
PDVSA, through its affiliate Bitumenes del Orinoco (Bitor), signed agreements with Petrochina Fuel and China National Petroleum Corporation in 2001 to create the Orimulsion production firm Orifuel Sinoven S.A. (Sinovensa). In 2003, Venezuela announced intentions to minimize production and linked Orimulsion prices to the price of carbon, much cheaper than the price of heavy fuel.
RamÌrez also called a report in Sunday's El Universal confirming the Orimulsion transfer "totally false" and added that Venezuelan rights were "inalienable." He also said that the contracts "would be honored" and that "it has been demonstrated with new technology that this extra heavy crude can be exploited more reasonably and economically."
But El Universal reported Monday that PDVSA has planned for the past year to transfer the Orimulsion contracts to Sinovensa and that meetings between the companies have taken place in the past few weeks.
Also, a memo written by Bernard Mommer, vice minister of hydrocarbons, when he was director of PDVSA's United Kingdom division and sent to Ramirez stated that selling Bitor to Sinovensa would represent important savings for Venezuela.
Leopoldo Puchi, secretary-general of the party Movement Towards Socialism (MAS), called for a debate on Tuesday in the National Assembly on what he called "not sufficiently clear" government intentions to give up Orimulsion patents.
"These are matters that must be considered in the Assembly and we propose it because agreements of national interest need to be approved by the legislature," Puchi said.
Economist and oil expert Rafael Quiroz Serrano also criticized any government move to sell Orimulsion rights because Venezuela had a monopoly on the fuel and because its patent represented 25 years of work.
"Taking measures like this will have a negative impact on everything for future deals in the industry," Quiroz Serrano said.
Carlos Borregales, former president of Bitor, said Tuesday that research for the patent cost the nation "a lot of money" and was designed to counter low oil prices at the time, Union Radio reported.
Venezuela currently sends 1.8 million tons of the fuel to China per year, 89,400 tons to Singapore and approximately 80,000 tons to Japan at around $93 per ton.
President Hugo Chavez announced the construction of a new Orimulsion production model and the intent to increase energy imports to China during an official trip to the country last December.
"We have been producing and exporting petroleum for over 100 years, but they were 100 years of domination by the United States," Chavez said. "Now we are free and we will put (petroleum) at the disposition of the great fatherland of China."
Sumate not a 'political party'
June 2, 2005
Maria Corina Machado, one of the founders of the nonprofit voter rights group Sumate, denied on Thursday that her meeting with US President George W Bush had any pretense in launching a presidential campaign.
"I want to ignore that because it distorts the battle taken up by non-governmental organizations in Venezuela and in the world," Machado told Agence France Presse (AFP).
The Sumate director was responding to comments made on Wednesday by Venezuelan foreign Minister Ali Rodriguez Araque, who called the civil association a "disguised political party."
Rodriguez Araque called the meeting between Bush and Machado "a provocation," and added that the encounter revealed that Sumate was "an agency of the United States of America in Venezuela."
Sumate was one of the principal organizations that helped to organize last year's recall referendum on President Hugo Chavez' mandate.
Machado insisted that Sumate was not a political party, saying she visited the White House on Tuesday to discuss concerns about anti-democratic practices in Venezuela, rather than to plot against the Venezuelan government.
"The government has evidenced its intolerance for people who think differently in Venezuela," Machado told AFP from North Carolina. "The criticisms against me show the international community that there exists a government that does not accept dissidence."
The District Attorney's Office accused Machado and fellow Sumate director Alejandro Plaz of treason last September after Sumate received a $31,000 grant from the US-funded National Endowment for Democracy (NED), whose mission is to promote democracy worldwide. The divorced mother of three faces up to 16 years in prison if convicted.
Alfonso Marquina, deputy for the opposition party Accion Democratica (AD), on Thursday called the government's response to the White House meeting "a type of jealousy on the part of Mr. Ch·vez, who has been asking for Bush to listen to him for five years and he still has not let him."
Rosalio Castillo Lara, Venezuela's only cardinal, called government criticism "laughable," Union Radio reported.
"Maria Corina Machado has all the right to put forward her ideas where ever she wants and that is not treason," said Castillo Lara. "When I heard the (government) reaction, it surprised me, as well as the harsh words that several representatives of the people have said, even asking to take away her citizenship."
Jens Erik Gould
July 21, 2005
The leadership of Latin America's largest economies--Venezuela, Argentina and Brazil--has taken a noticeable turn to the left.
Many tie this trend to a regional perception that US-supported free-market policies such as privatization and tight fiscal spending have not alleviated poverty or created many jobs.
It is in this environment of free-market frustration that former Finance minister JosÈ Rojas is striving to win the presidency of the Inter-American Development Bank (IDB), the largest regional bank of its kind.
Next Wednesday, Rojas will face off against four other candidates to lead what is a major source of funding for economic, social and institutional projects and regional integration programs in Latin America and the Caribbean.
Despite the recent shift to the left in Latin American politics, Rojas told The Daily Journal that the bank needed to help strengthen the private sector in Latin America.
He thought some states had overreacted to financial crises such as that of Argentina in 2001.
"The crisis was not interpreted as a failure of the free market," said Rojas, who was also vice president of state-run Petroleos de Venezuela (PDVSA) last year. "In no moment can it be interpreted as a war against the private sector."
Rather, such crises were due to the market's inability to overcome asymmetries including heavy concentration of wealth, financial flight and the lack of redistribution of revenue by the state, he said.
"When no one bet on Argentina, the IDB was the first institution to come out and help Argentina," he said.
Rojas believed that cutting poverty rates across the hemisphere would require a more efficient and farther-reaching IDB that could intervene more quickly when its help was needed.
He added that the IDB should look for worthy partners in the public and private sectors to increase its potential as a "fundamental element of development." In so doing, the bank could do more to help countries advance their own initiatives such as selling bonds.
The economist proposed that Latin American financial markets be strengthened to increase the potential of the region's internal capital market.
For example, he thought the region's nations should be able to issue bonds without going through New York or Luxembourg.
He said this would make the region's financial system more efficient and less costly. The system would then evaluate itself, creating less risk and a more fluid flow of information.
Speaking about his own country's economy, Rojas said that today marked the first time in the country's history that it has "taken the initiative to increment its own economic model."
The Ch·vez government has put an increasingly social tint on the economy, marked by social development programs and economic policies such as co-management and expropriation of unused land.
Rojas said it was too early to judge the model, but underlined that after being historically slow to adopt new economic models, Venezuela might now be influencing other countries to adopt its model.
He urged economists to start measuring and interpreting Venezuela's new economic model outside of politics. "Until now, the only way of analyzing it has been simplistic: 'I am with or I am not with the government,'" Rojas said. "This is extremely superficial criteria."
When asked about his position on Venezuela's recent efforts to purchase Ecuadorian bonds, Rojas said, "each government is independent to advance its own politics."
"The bank doesn't criticize and shouldn't criticize," Rojas said. "The bank helps and orientates. It never gives opinions or gets involved in the internal politics of countries."
The World Bank did not dictate guidelines for countries to follow either, he said. There were only cases where the bank demanded certain policies by contract, for example, when it gives loans.
Rojas believed that the United States, which controls 30 percent of the bank's votes, "has always promoted the institutions that have missions to fight poverty," and mentioned the World Bank and the Bretton Woods project as examples.
The IDB was founded in 1959 between 19 Latin American countries and the United States. It now has 47 member states.
July 17, 2005
Relations between President Hugo Chavez and the Venezuelan Catholic Church took another turn south on Sunday as the head of state charged that Cardinal Rosalio Castillo Lara had "the devil inside of him."
Chavez berated Castillo Lara after the cardinal called the government a dictatorship in an interview printed by El Universal on Sunday. Castillo Lara summoned Venezuelans to exercise Article 350 of the Constitution, which he said gave them the right not to recognize a government that violated principles of democracy or human rights.
"This is the most ill-fated government in the history of Venezuela," the nation's only cardinal said. He also likened upcoming elections organized by the National Electoral Council (CNE) to "a pantomime that no one can trust."
"He is a pantomime," Chavez shot back at Castillo Lara during a fiery segment of his Sunday television show "Hello, President." The president went on to call the cardinal an "outlaw," "immoral" and a "golpista"-or, one who stages a coup d'etat.
Chavez reprimanded Castillo Lara's comments as an attempt to discourage voters at upcoming August local elections. The crowd matched the president's fervor with the referendum-era chant, "Oh, ah, Chavez won't go away."
"The whole world knows that a democracy is living in Venezuela for the first time in 200 years," Chavez said, responding to the cardinal's accusations.
The president then held up a cross and told the crowd he was certain that Jesus Christ was a "radical socialist." He added that Che Guevara and Simon Bolivar were "Christ-like."
In the interview, Castillo Lara laughed when El Universal cited Chavez' comments that there had never been a Venezuelan government "closer to the mandate of Christ." He argued that the president's goal was not to favor the poor, as the government said, but to concentrate power.
A retired cardinal, Castillo Lara said he could not officially speak for the Church. But he did accuse Chavez of trying to divide up the Church ranks by giving some of its members benefits under the table, an effort which he said had failed because the Church was "united."
The El Universal article was published after Chavez told the Vatican's recently appointed ambassador to Venezuela last week that the country's bishops were against his government.
One Sunday in July 2006, I attended "Alo, Presidente," Hugo Chavez's (very, very) long Sunday television show. Here's what I wrote afterwards.
Jens Erik Gould
Daily Journal Staff
July 7, 2005
For many, Sunday is a day of rest. But not for President Hugo Chavez and the many supporters who tune into his television program "Hello, President" every seventh day.
Last Sunday, crowds of people sat in rows of chairs outside the National Vocational Training Institute (INCI) in the low-income Caracas suburb 23 de enero, the site of the 227th version of the show. Facing the crowd were stacks of speakers channeling the voice of Chavez.
Stiff security separated the street crowd from the president. Inside the institute, around two hundred students, military and government officials sat under a canape in the commons. Nearly half the crowd was dressed in red, the color of Chavez's Bolivarian revolution.
At the first glimpse of the president, the energy in the crowd changed and everyone was applauding loudly. Chavez emerged from the second floor of the complex and took a seat at his famed his famed "Hello, President" desk in front of the camera.
Since the average Sunday program lasts five to seven hours, food and drinks were available for audience members. Communication minister Andres Izarra has said that Chavez spends at least 40 hours a week on the air.
Throughout Sunday's six-hour long show, Chavez made an effort to connect with his audience on a personal level. At one point, a young boy yelled "Chavez!" and ran up to the stage. The head of state lifted him and a young girl into his arms and asked them about their families.
The president showed his humorous side and knack for impersonation as well. At one point, he swayed back and forth, imitating a drunk man who once told him "Long live Fidel (Castro)."
"Drunks say the truth, but when they pass a certain limit, it's just stupidity," said Chavez. The audience responded favorably to his jokes and impersonations. "Yes, that's it, president!" yelled one young man.
Chavez spent a large portion of the program speaking with students from Mision Robinson, a government-funded social program that provides elementary school classes for citizens lacking an education. "I didn't know how to read or write," said one student. "I learned it all at Mission Robinson."
The president weaved humor into the topic of illiteracy as well. "The guys are lazier," he said, noting that most students present at the show were women.
Chavez asked if the students had studied English and jokingly pronounced a couple phrases in broken English. "How are you? What's your name?" he said.
The president spent a good twenty minutes with the map of South America. Drawing a line connecting Caracas, Brazilia and Buenos Aires, Chavez the three most populous nations in South America were a new "axis."
With the map of South America in his hands, he called the continent "a beautiful woman dancing on only one foot." He said "What do you think," asking the crowd what they thought of the axis. Suddenly, he broke into song, briefly singing a verse containing the same phrase.
Sitting in the front row were the Argentine president's sister, Alicia Kirchner, who is also the country's minister of social development, and the newly appointed Argentine ambassador to Venezuela, Hilda Garren. Kirchner gave Chavez several presents.
Kircher said that her country and the Chavez government shared "the same philosophy of work" and "collective conscience." "I hope you'll be here with us until 2001," Chavez told the Argentines.
Chavez proposed a Latin American social project that would fight poverty and illiteracy in the whole region. "Our people are far from integration," he said about Latin Americans.
In many episodes of his program, Chavez maintains harsh dialogue towards the government of the United States. Last Sunday was no exception. He ridiculed recruitment efforts by the United States army. "No one wants to go to war, but they're starting recruitment again," he said.
The president mocked Washington's agitation over the Venezuelan purchase of 100,000 AK-103 assault rifles from Russia. "Do they think we're going to take Washington with (100,000 rifles)?" he asked rhetorically. "We're going to take it, but not with 100,000 rifles." He also said precise plans existed to invade Venezuela.
Sunday's program is one of several opportunities citizens have to request state aid. Outside the institute, a group of government workers sat around a table processing letters from people around the nation. They highlighted the handwritten requests for pertinent information and marked each one with a label: "Housing," "Health" or "Employment."
After the program, a lady approached Energy and Petroleum minister Rafael Ramirez asking for help. Her daughter had been fired from her company because she was a "chavista," she said. Ramirez asked her to give her information to an assistant.
Ramirez asks companies for 'respect,' 'goodwill'
Jens Erik Gould
July 6, 2005
Transitional contracts drafted by the Venezuelan Ministry of Energy and Petroleum declare current operating agreements with foreign oil companies illegal and would reduce company rights and benefits.
A draft of the transitional contract obtained by The Daily Journal calls the operating agreements "incongruent with legal framework" and gives companies a period of six months to convert their operations to joint ventures.
"The companies have enough ability to understand that there is a legal framework that has to be respected, and that if they want to be exploiting petroleum in a country with one of the biggest reserves on the planet, they have to respect our laws," Energy and Petroleum minister Rafael Ramirez in an interview with The Daily Journal on Sunday. Companies that signed the transitional contracts would show "a sign of goodwill," he added.
The government argues that the 32 operating agreements signed with foreign companies in the 1990s are oil producing agreements rather than service contracts and therefore violate Venezuelan law prohibiting private participation.
The transitional contracts are meant to govern the operating agreements while Venezuelan authorities define the legal framework for joint ventures required under the stricter 2001 Hydrocarbons Law. The law stipulates 30 percent royalty payments and majority participation by the state-run oil company PetrÛleos de Venezuela (PDVSA).
As of yet, no companies have announced plans to sign any transitional agreements.
The draft makes no mention of company rights to international arbitration, a benefit enjoyed under current contracts. Instead, it states that all contract disputes would fall under the jurisdiction of Venezuelan courts.
The government would also put an annual limit on capital fees, operation fees and interest paid to companies under the operating agreements, the draft states. Payment by PDVSA would not exceed 66.67 percent of the total value of crude produced in each operating area.
The document explains that fees exceeding this annual limit could not be transferred to another calendar year, revoking the contractor's "right to receive any compensation" for unpaid fees.
The annual limit would prevent PDVSA from accumulating losses, which the company argues is occurring under the current payment scheme that calculates fees based on the high price of oil.
Despite the condensed benefits, Ramirez offered assurances that the companies were not apprehensive about the transitional contracts. "Various" companies were interested and all companies were negotiating with the government, he said.
Asked if he expected companies to sign the transitional contracts, Ramirez said, "with some, yes; with some, no."
Shell Venezuela president Sean Rooney said last week that his company was in favor of converting to joint ventures.
"Shell was proactive in approaching the government to talk about converting our operating agreement to a joint venture because we felt it was the right thing to do," Rooney told reporters.
Joint ventures are expected to allow companies to own and market oil, rather than the current arrangement in which they are hired to pump PDVSA's crude.
While Rooney declined to say last week whether his company had received a draft of the transitional contract, he admitted there was a possibility that Shell would sign a transitional agreement.
U.S. ambassador to Venezuela William Brownfield said in an interview on Monday that while Venezuela had a sovereign right to govern its natural resources, it also had an "obligation to respect the contracts that it has already signed and voluntarily entered into."
Henrique RodrÌguez, president of the small Venezuelan oil firm Suelopetrol, told reporters last week that his company had received a draft of the transitional proposal, but he called it a mere "proposal for negotiations."
The anticipated regulations for the new joint ventures are expected to resolve uncertainty surrounding how much managerial control the companies will have given their minority participation.
While the government takes an increasingly nationalist stance, some major foreign companies have reiterated a willingness to keep doing business in the country.
"With a company like Chevron being in Venezuela for over 60 years, we are committed to Venezuela," said Ali Moshiri, president of Chevron Latin America, in an interview last week. "We just need to work out some of these issues."
Other companies who have operating agreements in the country include ExxonMobil, British Petroleum, Repsol YPF, Petrobras and China National Petroleum Corp.
Brownfield celebrates July 4th
Jens Erik Gould
Daily Journal Staff
July 5, 2005
A crowd of American citizens and embassy officials were on hand at the US Embassy on Monday as United States ambassador to Venezuela William Brownfield hosted a ceremony commemorating Independence Day. In honor of the occasion, four members of the US Armed Forces raised a large American flag on the Embassy hill overlooking Caracas.
During his speech, Brownfield praised his country, saying it allowed citizens to "speak our mind and to live as we wish, so long as we do not impinge on our neighbors."
He also said Americans were possibly the "most observed" people in the world. Asked about the comment later, he told The Daily Journal, "since about 1945, the US, its government and its people seem to attract more attention, more analysis, more news and press coverage than any other people in the world and perhaps any other people in history."
One American woman attending the event said that she felt under the microscope living in Caracas. She added that she sometimes felt unsafe as government criticisms of the United States have increased.
Venezuelan president Hugo Chavez often refers to the United States as an "imperialist empire" and has nicknamed President George W. Bush "Mr. Danger." US officials have called Venezuela a threat to the region.
Bilateral relations have been strained by recent events, including the row over the fate of suspected terrorist Luis Posada Carriles and President Bush's reception of S˙mate director Maria Corina Machado at the White House in early June.
The ambassador said there was "no question whatsoever" that the "rhetoric and dialogue" between the two governments had changed in the past few years. Political and diplomatic factors accounted for this change, as well as "the new nature of the economic relationship between the two countries," he said.
Venezuela has sought to strengthen commercial ties with countries such as Iran, China and Russia and is also a principle advocate of Latin American economic integration.
Brownfield said he was not "deeply troubled" by the Venezuelan effort to develop new economic ties. "My task is to manage this relationship in a way that most meets the needs and the interests of the American people and the Venezuelan people for the years to come," he said.
The ambassador did put politically motivated economic decisions in a separate category. "We have a right to express a view if we believe that some markets are being acquired or there is penetration that is driven more by political consideration and political decisions as opposed to economic and commercial decisions," Brownfield said.
Regarding stricter policies towards foreign oil companies by Venezuela, Brownfield said the government had a sovereign right to determine how to handle its natural resources and to set its own tax and royalties policy. Yet he also said that Venezuela had an "obligation to respect the contracts that it has already signed and voluntarily entered into."
Asked about the local sentiment towards Americans, Brownfield said he could not define how Americans were perceived because Venezuelan society was very diverse. "I think overall, however, our relations people to people are very good and I think they're as good as you'll find almost anywhere else in Latin America," he said.
He said the bilateral relationship was almost 200 years old and also said there existed a "very close relationship that is tied to certain economic principals-prinicpally petroleum," which has lasted 80 years.
Similar flag ceremonies were be held on Monday at 160 embassies worldwide, the ambassador said. He added that traditional parades, picnics, baseball games and fireworks would take place across the US.
The native Texan said his favorite place to spend Independence Day was on the banks of the Colorado River in Austin, Texas, listening to the Austin Symphony Orchestra and watching a fireworks display.
JENS ERIK GOULD
Jens Erik Gould is a political, business and entertainment writer and editor who has reported from a dozen countries for media outlets including The New York Times, National Public Radio and Bloomberg News.