Venezuela May Take Over More Rigs to Allow Drilling to Proceed

[Zorro]

Source: Bloomberg

Petroleos de Venezuela SA, the state oil company controlled by President Hugo Chavez, may take over privately owned oil rigs to ensure that they keep operating, Oil and Energy Minister Rafael Ramirez said.

If contractors try to use workers to halt production, equipment will be confiscated, Ramirez said today in a statement from the oil company known as PDVSA.

Today’s statement said future takeovers would be similar to that of an offshore rig owned by Ensco International Inc., which halted drilling in January because it was owed $35.5 million. PDVSA took control of the company’s offshore rig and began to operate it under supervision of company managers, Ensco said.

Venezuela, the biggest oil exporter in the Western Hemisphere, is seeking to avoid a loss in oil field productivity as private contractors shutter some rigs in response to non- payment of outstanding invoices.

Read more: http://www.bloomberg.com/apps/news?pid=20601086&sid=a8DElxjSsplY

[alexandria]

1. If Chavez keeps this up he will go down faster than the Titanic.NT/

[digidigido]

2. I wouldn't bet against him, not in this economic climate

[Peace Patriot]

8. Keeps what up? Ensuring production in a vital industry?

It is we who are being sunk like the Titanic, in Grover Norquist's plan to "drown" the U.S. government "in the bathtub"--not Venezuela, whose good government socked away $42 billion in international cash reserves against a rainy day, whether a drop in oil prices, or a Bushwhack Financial 9/11, and has furthermore helped its neighbors prepare themselves against more "shock and awe" global corporate predator economics, by creating the Bank of the South--a regional development fund with social justice goals, which has supplanted the U.S.-run World Bank loan sharks. While we flounder around the icebergs of rightwing hatred of the poor and the working class, Venezuela can weather three years at present oil prices before it has to touch its cash reserves--and reserves like that give Venezuela great flexibility in structuring use of their cash reserves, should they ever need to touch them.

Who are the fools on a sinking ship? Not Venezuelans, nor other South Americans whose many leftist governments are casting off U.S.-domination and have joined together to form an all-South American Common Market--USASUR. We are the fools drowning in a sea of debt not of our making. We are the losers, who let our democracy slip away.

Your dire prediction about Chavez is an emotional projection, I think. Our government fucked us over so completely for the last eight years that we may never recover. And, while jobs bled out of our country, due to the greed of our corporate traitors, the Chavez government was turning Venezuela's oil profits to good purpose--creating automobile, tractor, machine parts, tech, shipbuilding and other manufacturing--completely neglected by prior rightwing governments--and stimulating agriculture as well, improving Venezuela's food security from about 0% to 24%, and producing astonishing economic growth--a nearly 10% growth rate, over the last five years, with the most growth in the private sector, not including oil.

What have we to show for the last eight years? A ten trillion dollar deficit (and counting) and 700,000 jobs lost last month alone!

Who are the passengers on the Titanic, hm?

[Rage for Order]

9. Why won't Chavez pay his bills?

you stated "...Venezuela, whose good government socked away $42 billion in international cash reserves against a rainy day...". If Chavez does in fact have $42 billion in cash socked away, why won't he pay Ensco the $35.5 million (a drop in the bucket compared to $42 billion) they are owed and let Ensco continue production? Instead he prefers to stiff people on the bills he owes and steal their property.

[ConcernedCanuk]

14. Maybe he's still sorta pissed off the USA deposed him and tried to kill him?

.
.
.

USA will never admit to having anything to do with his demise in the past

so they will never apologize

USA REALLY fucked itself messing around in Latin and South America

USA shoulda known that sooner or later a REAL leader would show up down there

Remember

Hugo got his boost under Dim-Son's reign

go figure . . .

[hack89]

16. Why punish ENSO?

they are not the US government.

[christx30]

18. I wonder how Chavez would react

If the US decided to nationalize and/or sell off any US holdings of Citgo. That is owned by Venezuela. Maybe we could say something like Chavez owes money to a US company and we are trying to collect. I mean, since Chavez seems to have no trouble nationalizing private property for his country.
This is not an attack on Chavez. Just curious what his reaction would be in that case.

[Judi Lynn]

22. His country has been nationalizing its resources since the 1970's. n/t

[christx30]

27. Well

the question I asked is how would he react if something his country owned was taken from him like if the US nationalized any thing to do with Citgo? Would he simply accept it and move on? Or would he call us thieves and demand that we be held accountable for the "crime"?
I imagine that even someone like Chavez would view it as theft. It's easy to take someone else's property in the name of socialism, but when it is your property, you would not be so be happy about it. I wish there was a way we could test that theory.

[EFerrari]

28. Expropriation is not theft. The asset is paid for.

And your ill wishes for the Venezuelan people are noted.

[Judi Lynn]

30. You'd think these people would feel obligated to have a basic understanding of the subjects

they attempt to discuss.

How can people get so fired up about something when they have absolutely NO IDEA WHATSOEVER what any of it means.

No wonder it's so easy for the perception molders to get them wild to turn various countries into sheets of glass, to kill them all and let God sort them out, etc., etc.

Damned idiots. Not nearly intelligent enough.

[christx30]

31. I have no ill will

toward the Venezuelan people. I just want to know how Chavez would react if someone were to treat his property the way he treats other people's property. The Irish guy's land, the oil rigs that are getting snatched up, the rice factory. All of those things were owned by someone else, probably someone that did not want to sell. That kind of stuff happens in this country all too often. It is ostensibly for the betterment of the people that live in the area. But that is small comfort for the person that owned it. The supreme court pissed me off in Kelo vs. the City of New London. These were not big businesses that had their stuff stolen. These were homeowners who's homes were bulldozed to build a Pfizer plant. They may have been given what the government thinks is 'fair market value', but there are some people that love their home more than the money. And before you jump over me for siding with "rich" homeowners, just remember this: in most cases like this, the hammer of eminent domain falls mostly on the heads of politically challenged groups. I.e. The poor and minorities. A quick google search can turn up case after case of eminent domain being used against groups that are often times supported by us. In Austin 2 years ago, hundreds of poor and otherwise homeless people were kicked out of a trailer park that was being re-purposed by the city.
Whether a city is doing it for increased tax money, or a socialist leader is doing it for his country, it is still wrong and it still stinks.

[EFerrari]

32. People didn't own those assets. Transnational corporations did

and they were violating Venezuelan law. The difference between Venezuela and the United States is that in Venezuela, those corporations get consequences for ripping off the public and in the United States, they get TARP money.

It's not wrong to enforce the laws of your country. And I do agree with you about eminent domain used against private citizens. :thumbsup:

[EFerrari]

10. This last spate of articles may be in anticiation of a coming conference:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3770554&mesg_id=3771079

[Bacchus39]

12. there is no moratorium on news prior to political events

as you think there should be. and what does Obama need say about Venezuela with Lula? nothing.

[Rage for Order]

3. He's quickly becoming a charicature of himself

He's dropped all pretenses of expropriation and moved directly to outright seizure of assets. Apparently he expects companies to provide him with free labor and materials.

"We owe you $35.5 million dollars? Too bad. Keep doing more work for us that we won't pay you for. While it is unfortunate that you continue to incur expenses for which Venezuela won't reimburse you, your sacrifice is necessary to realize the dream of the Bolivarian Revolucion!"

:eyes:

[Warren Stupidity]

15. and he shot my dog too

PDVSA has started paying off past-due bills to 5,387 contractors, or 94 percent of those that were owed money, Ramirez said. The Caracas, Venezuela-based company is reviewing payments to 56 vendors with contracts of about 5 years because “they have a very high cost structure” that doesn’t reflect the past year’s decline in oil prices, according to the statement.

PDVSA and Ensco have reached a “pre-agreement” that will allow the Dallas-based company to continue its work in Venezuela, Eulogio del Pino, PDVSA’s vice president of exploration and production, said in a text message response to questions.

http://www.bloomberg.com/apps/news?pid=20601086&sid=a8DElxjSsplY

This seems to be more about renegotiating the 6% of existing contracts that have 'cost structures' that are completely out of line with current reality. The Venezuelan government has in the past first tried to negotiate in good faith, and only when that fails have they resorted to outright expropriation, and even then there is generally compensation for assets seized. The Bloomberg article does not mention compensation one way or another in this particular incident, but the fact that PDVSA is negotiating with and has reached a 'pre-agreement'[ with Ensco suggests that the situation is not nearly as inflammatory as you wish it were.

[EFerrari]

29. I never want to sit in a theatre with any of these people.

[Tandalayo_Scheisskopf]

4. There is already an oil glut.

There was an article on Bloomberg the other day that storage capacity, including the infamous tankers at anchor waiting out "Contango" is almost maxed out.

These oil-producing nations need cash flow to maintain the civil peace and keep their leaders in power. If the cash flow dries up, they are sunk and the market tanks. Which is usually what happens after speculative excesses like we have seen in the very recent past.

The greed of the speculators, the oil producing nations, the brokers, the financial system as a whole has lead them to where they are today. The present spikes in petroleum market prices are an aberration and more reality-based market observers say they cannot last.

$10.00 a barrel oil, or less, cannot be far off. I just hope we have sufficient national will to take advantage of the market collapse, when it really does tank, add some modest gas taxes, indexed to oil prices and set with a tripwire should oil prices go beyond a pre-determined level and use the proceeds for infrastructure and especially alternative energy development. Let's end this energy charade forever.

[cosmicone]

5. Right on

We have to keep fueling of the Hummers, Expeditions, Denalis and Escalades at a financially painful level.

[pampango]

36. Drill, baby, drill.

:)

[Bacchus39]

6. good post n/t

s

[ProudDad]

7. What part of Peak Oil

and Supply and Demand did you not understand?

Oil will NEVER get down to $10 again. It's more likely that when (if) demand rises again the price will too. And with more scarcity, it will rise even higher than last year...

Of course if that demand is satisfied then we're all doomed. You HAVE heard of Global Climate Change, right?

http://postcarbon.org/rnd-problem
http://www.postcarbon.org/
http://www.energybulletin.net/primer

And the response:

http://www.transitionus.org/

[Tandalayo_Scheisskopf]

13. What part of "oil glut" don't you understand?

The facts are quite compelling that while peak oil is a concern for the future, it was turned into a false causus belli during then last runup. That runup was the economic tipping point, the reason we are where we are today. There is plenty of evidence that peak oil as a rhetorical tool in the service of speculative cover was seeded into the energy discussions.

Cushing WY is full. The SPR is full. You cannot lease a tanker. They are all sitting at anchor, full to the gills with oil. The only thing propping up prices right now is a return to speculation and the perfidious tricks of the refiners who are strangling refinery output.

It would be to our best benefit to stop the strangulation and speculation, so we could then add taxes that would fix our infrastructure and fund development of alternative energy.

[NickB79]

21. Price spikes, AND price drops, are predictions of Peak Oil theory

It was predicted years ago on DU's EE board, and on other environmental and energy discussion forums, that demand destruction associated with high oil prices and economic collapse would cause oil consumption and prices to decline. As economic recovery sets in, oil prices will likely shoot back up, knocking world economies back to the mat, so to speak.

Unfortunately, it might be a few more years before any of us know for sure if the past few years of price spikes and crashes is an abberation or a trend.

[DainBramaged]

25. Peak oil, is that like the limit the tank farms have reached in the US

because the tankers for rent are nearly gone, and at about $76,000 a day, pretty soon the oil producing nations will literally have to shut off the spigot to prevent pollution.

Peak oil. A LOT of that was going around before the world realized it was over-consuming everything. As a matter of fact, I've heard one form or the other since the 60's, and God knows I have tried to minimize my use of oils, as a matter of fact, I use silicone now where I use to use oil.

[ohio2007]

11. Stagflation , a symptom to watch for from oil producers.

...oil-producing nations need cash flow to maintain the civil peace and keep their leaders in power. If the cash flow dries up...

they will need to point the finger at external "meddlers" for their 'mandated' shortages and hope dumb asses will buy into it or they will face increaseing #'s "citizen" soldiers

http://www.liveleak.com/view?i=1a2_1234058829

[Arctic Dave]

17. Sounds like Palin's plan for reelection in a few years.

[ohio2007]

20. Thats Hugo's 2012 (oil) platform

I saw one thread that said "Hugo to cut oil contracts"
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3766873&mesg_id=3766873
and another that states "Hugo to take over platforme to pump more oil ?
wtf ?

Is Hugo taking over the competition in order to keep his rigs repaired and pumping ?
dunno

he is "taking over"

Venezuela to Cut Oil Contracts as Prices Fall

snip


Also on Tuesday, Mr. Chávez replaced defense minister Gen. Gustavo Rangel Briceno with Vice President Ramon Carrizalez as part of a broader cabinet shake-up that included scrapping two ministries

http://online.wsj.com/article/SB123612776562124343.html?mod=googlenews_wsj

[marshall]

19. I'm intersted to see how President Obama reacts to the overtures made by Chavez

He has reached out a friendly hand to our president. They do have shared interests and ideas, as well as significant differences. I hope they can work together.

[Codeine]

23. He's also talked mad shit about him. nt

[marshall]

24. Presidents have to develop a very thick skin

Any personal attacks have to be set aside for the best interest of the country and shared interest.

[Codeine]

26. Sure. But there's been no "friendly hand."

Just cheesy insults.

[EFerrari]

33. Obama and Lula will be talking about Venezuela during their meeting

the middle of this month. That's why, imho, we're seeing an uptick in these articles that try to paint Chavez in a negative light. The opposition and their money interests do not want Obama and Chavez to have a good relationship and they will fight it.

[classysassy]

34. My point of view

President Chavez,is helping the poor people that have been screwed by the rich crooks in their country,the bs that has been and continue to be printed by the rich invaders,is an attempt to hold onto their stolen wealth.

[cobalt1999]

35. My point of view is companies don't continue to provide services if you don't pay them.

Maybe he should just pay his bills on time and forgo the melodrama.