January 15, 2009

Chavez reaching across ideologies for oil

Venezuelan President Hugo Chavez is inviting Western oil companies to submit bids to develop new areas of the Orinoco Belt for petroleum production.

Nineteen oil companies have paid $2 million each for data necessary to submit bids, in spite of the political uncertainties of dealing with Chavez, The New York Times reported Thursday.

In 2007, Chavez abruptly nationalized oil fields developed by Exxon Mobil and ConocoPhillips. The companies are still in fighting legal battles over the decision, the Times said.

With his anti-capitalism stance, Chavez has courted business with nationalized energy companies from China, Iran and Belarus in recent years. In courting Western oil companies, recognizes the need of losing a battle to win the war, Roger Tissot at Brazilian company Gas Energy told the Times.

Venezuela's oil output has declined from 3.4 million barrels a day a decade ago to about 2.3 million barrels a day, Organization of Petroleum Exporting Countries records show.

Ninety-three percent Venezuela's export revenues derive from oil, making the outreach to Western companies a pragmatic switch, the Times said.

Venezuela's state-owned oil company Petroleos de Venezuela funds and runs various social programs including subsidized food programs, road building and training Olympic athletes, the Times said.