Chevron OK with Venezuela arbitration ban

[Judi Lynn]

Wednesday, 04 November, 2009, 17:50 GMT

Chevron OK with Venezuela arbitration ban
Wire reports

US supermajor Chevron is willing to work in Venezuela under contracts that ban international arbitration in case of conflict, a company executive said.

“Attractive fiscal terms” are most important as the company decides on new projects, Ali Moshiri, president of Chevron Latin America and Africa, said yesterday in an interview at a heavy oil conference at Margarita, Venezuela.

Venezuelan President Hugo Chavez doesn’t want foreign courts or panels getting involved in disputes between his government and international energy companies.

US supermajors ExxonMobil and ConocoPhillips have asked arbitration panels in Europe and the US to order Venezuela to compensate the companies for multi-billion dollar assets seized in 2007.

“There are many risks, but you have to look at the whole picture and see if it meets your requirements,” Moshiri said in a Bloomberg report.

More:
http://www.upstreamonline.com/live/article197699.ece

[Peace Patriot]

1. They don't say that Exxon Mobil, which sued Venezuela, got its ass handed to it

in a London court.

--

"ExxonMobil and ConocoPhillips, which had stakes in projects similar to Petropiar, filed for arbitration in 2007 amid Chavez’s nationalisation drive.

"Chevron, along with France’s Total, Norway’s StatoilHydro and UK supermajor BP, accepted Chavez’s terms and work with state-run PDVSA."

--

Exxon Mobil walked out of the talks--this was back a few years during the Oil Junta in the US--when the oil monsters thought they were entitled to hijack the US military and slaughter a million people in Iraq, to steal their oil. They balked at the terms of the Venezuelan deal, and went into an arbitration court in London, trying to seize $12 billion of Venezuela's assets. Exxon Mobil had just had the most humongously profitable quarter of any corporation, ever, and now was trying to literally take schoolbooks out of children's hands and food out of their mouths. The judge ruled against them. I don't know if that was the final disposition of the case. I think it was. I have heard not one word about it since then.

It was one of the most magnificent moments of the Chavez government, as far as I'm concerned. Multinational corporations should operate in countries only with the permission of the people who live there, represented by a government that looks out for their interests, and that can demand whatever it damn pleases as the cost of doing business in that country. Corporations need to be taught this lesson again and again. They have no rights whatsoever. They are not sovereign. Only the people are sovereign. Corporations either follow the rules set by the sovereign people of that country, or get booted. Back in early America, corporations were not permitted to live forever, accumulating vast wealth and power over many decades, and acquiring the rights of individuals, and using their wealth and power to buy governments. These multinationals are so wealthy they have become like "floating countries," moving resources, jobs and money among many countries, with no loyalty to anyone. They can thus--by corrupting governments--subvert and cheapen labor markets, avoid environmental regulation, pay no taxes and evade all social responsibility. These corporate monsters are a modern creation, and they as anti-democratic as they can be. They need to be seriously curtailed.

Exxon Mobil thought it could go into Venezuela and stomp around with big boots, demanding this, demanding that, and the Chavez government basically told them to kiss off. So they tried to punish and rob Venezuela, and lost that battle as well. The beneficiaries are the people of Venezuela, and all the other corporations that now get to make a decent profit in Venezuela, but not all the profit!

And that's the way it should be!

It's the first time I've ever seen a government do this, on behalf of their people. I was cheering from the sidelines! I think it needs to be done everywhere.

Thomas Jefferson was very worried about the potential power of business corporations, and wanted to curtail them right in Constitution. He got argued out of it--I'm not sure by whom, possibly James Madison--with the notion that power over the corporations would be much better placed with the states, because they are closer to the people. Jefferson finally agreed--the people and their state governments would be the best guardians against untoward corporate power. And that's where the power to charter corporations remains to this day--with the states. At first, business corporations were short-lived, operated under strict guidelines with specified public good purposes, and could be arbitrarily dissolved without cause.

Jefferson's and Madison's worry about corporations was no doubt related to the powerful British East India Company, whose tea was dumped into Boston Harbor by the colonists. The British East India Company was an instrument of the Crown, the British ruling class and the Empire. One of the reasons for that protest action was that the distant Parliament in England determined the tax on the tea that the colonists had to pay. The colonists would only agree to be taxed by their own locally elected representatives. So closeness to the people was an important issue, on business and other matters--and it was the reason for one of the few really bad mistakes that the Founders made in the Constitution. They hadn't reckoned that the states could become as corrupt as a central government, on corporate power, nor that the wealth of the west would spawn interstate railroad barons and ultimately Supreme Court decisions and other actions that set the stage for our modern multinational corporate monsters, that lord it over people, resources and governments, and live forever. We have no Constitutional protection against it, except in the general sense that corporations have become a grave danger to national security--to the government itself, and to democracy--and are extremely harmful to the general welfare.

It is conceivable that--like the 'TRADE SECRET' voting machines, containing code owned and controlled by rightwing corporations--our problem with untoward corporate power could be addressed at the state level. Both powers--to choose voting systems, and to charter corporations--still reside with the states. I would love to see a far-thinking state attorney general take this on. In any case, I was REALLY GLAD to see Chavez assert Venezuela's sovereignty over Exxon Mobil. That is truer to the American Revolution than anything that has happened here, in "the land of the free, home of the brave," in a very long time.

[Braulio]

2. The ExxonMobil and ConocoPhillips cases are still on

Exxon didn't have its anything handed to it. What Exxon lost was a move to freeze all of PDVSA's assets worldwide, claiming they would win the case and wanted to make sure PDVSA would pay off - ie they didn't want to see PDVSA sell its assets abroad to avoid payment to Exxon.

PDVSA showed the court they had no intent to sell their assets, and in any case, should they decide to sell, the court could at that time block the sale, therefore the Exxon move was premature. The court agreed. The ICSID case is still taking place in the USA, and the latest I heard was that PDVSA's lawyers were very worried because it was likely they would lose the case by the end of the year.

A multinational such as Chevron may be relying on a bilateral treaty to protect investments. This short article discusses how they work:

http://www.petroleumworld.com/Ed07071701.htm

Thus Chevron's future investments in Venezuela may be protected if they use a third nation subsidiary (a Dutch subsidiary is common).

For example, the Russians have disclosed to their media their intent to invest in Venezuela, provided the Venezuelan Congress approves a bilateral treaty which allows arbitration in a third country (the most likely being Sweden).

In conclusion, while Ali Moshiri is willing to provide cosmetic coverage for PDVSA, it's doubtful we'll see Chevron invest more in Venezuela unless they have bilateral coverage and international arbitration. The same will apply to any other foreign investor who has to commit large sums of money.

Furthermore, large service and construction companies are also going to insist on international arbitration for large contracts, plus possibly having PDVSA post bonds outside Venezuela. The exception may be the large Brazilian construction firms, such as Odebretch, which are getting very sweet contracts thanks to Lula's great touch with Chavez.

As an observer of the oil market, I like stability, and thus it's better if Venezuela behaves as any other player in the oil industry, establishing a track record of honoring its contracts and paying its contractors on time. Their record has been quite spotty recently. It is this spotty record which leads to concerns over their ability to execture real projects and deliver the oil to the market, and this of course influences (although in a minor way), the overall projection for supply/demand in the future. And this is the reason why, long term, Brazil appears to be a better bet to become the premier oil supplier to the USA from Latin America.

[Peace Patriot]

3. "As an observer of the oil market, I like stability...". Then you must hate rightwing coups

like the one the Bushwhacks supported in Venezuela in 2002, and the oil professionals' strike that followed soon afterward in a second effort to destabilize the country and topple its elected government, and the multimillions of US tax dollars poured into rightwing groups, through USAID-NED, CIA, DEA and other budgets, in Venezuela and other countries with leftist governments, to foster coup d'etats, civil war, white separatist causes in gas/oil-rich regions, armed rebellion, riots, murder, trashing of government buildings, assassination plots, anti-democratic cabals within the military, and war on small farmers with toxic pesticides and displacement of millions of people by the failed, corrupt, murderous, destabilizing US "war on drugs," and other such activities aimed at denying an orderly democratic society in these countries.

And if you don't hate these wrongfully funded (US taxpayer) anti-democratic activities--and your posts would indicate that you don't--perhaps you are hoping that they will succeed at imposing the deadly 'stability' of fascist rule. Nothing more 'stable' than a fascist dictator who can deliver the country's resources up to the likes of Exxon Mobil, on real good terms for the oil barons, with no opposition whatsoever, cuz the opposition has been crushed--tortured, murdered, 'disappeared'--and the interests of the country and its people have been sold for dirty coin.

It's interesting how you pit Venezuela against Brazil in a contest for the US oil market. I can see Exxon Mobil's hand in this, and that of its Bushwhack and other US corpo-fascist strategists. Divide. and. Conquer. But I think you greatly underestimate the determination of a leader like Lula da Silva to, a) never let the US do to South America what it has done in the past and what the Bushwhacks have tried to do again recently, and b) create solidarity among Latin America's leftist leadership to prevent such interference and to build a South American "common market" on the philosophy of "raising all boats."

I've noticed several of the anti-democratic posters here at DU touting Lulu as their preferred leader in South America, and ignoring and even outright denying the overwhelming evidence of friendship and accord between Lulu and Chavez. And I'm sorry, Braulio, but you called the Chavez government "communist" and that is so wildly out of sinc with reality that I have to categorize you as anti-democratic. Lulu and Chavez represent different shades of the same political philosophy--sovereignty for South America and social justice. They differ in personality, and their countries differ, politically and economically, but they are in accord on those principles, and nothing shows that more than the restrictions on the use of Brazilian oil that Lulu has insisted upon, including Brazilian control of the oil industry--and particularly as to the new big oil finds--for the benefit of the poor. That is exactly what Chavez insisted upon, to Exxon Mobil--local majority control of the enterprise--and what Exxon Mobil arrogantly refused to agree to, while British BP, France's Total, Norway's Statoil and others did agree. They will respect Venezuela's sovereignty and Exxon Mobil will not. Exxon Mobil wants to own everything, including all profits, everywhere. That is their M.O. And they will do everything they can to break that resistance to corporate rule, even if it takes decades of "divide and conquer" and other nefarious, brutal activities, up and including, what they did to Iraq--hijacking the US military to slaughter a million innocent Iraqis, to get at their oil.

When you seemingly innocently make a statement like, "As an observer of the oil market, I like stability...," you are trailing loads of Wall Street Journal propaganda in your wake. They no more want "stability" than Exxon Mobil does. They want their corporate pals to have total power over governments and resources, at any cost. "Freedom = the freedom to loot"--Donald Rumsfeld. Social stability is immaterial to them, as long as they have soldiers paid by somebody else (US taxpayers) to seize the resources they want to steal and guard their oil platforms. And when they run up against resistance to their "taking all the marbles," they will do to Lula da Silva and the Brazilian people exactly what they have tried to do to Chavez and Venezuelans, and to Morales and Bolivians, and are plotting to do to Correa and Ecuadorans, and any others who resist corporate rule and who insist on democracy and a fair deal for their people.

Lula da Silva sees all this very well. He is a visionary leader. And it's too bad that his term of office is coming to an end, because the vultures are waiting, and the bribes have been paid out, and netherworld systems have been put in place to rip Brazil to shreds, if monsters like Exxon Mobil can get away with it. He is trying to put everything in place--strong rules for use of the oil, the alliance with Chavez, the stability of neighboring smaller countries (Bolivia and Paraguay, in particular) and the stability and solidarity of the entire region (for instance, by his support of President Zelaya in Honduras). We're talking real stability--not Exxon Mobil-gets-all-the-marbles stability. But I don't see strong leadership arising to follow Lulu. Maybe that's what people like you--"observers of the market"--are counting on.

[spanza]

4. Witch hunting?

Tell me, what's "anti-democratic" about not agreeing with you on Lula being closely aligned with Chavez?

I mean, it could be a wrong analysis/opinion, but anti-democratic??

It seems you're making a lot of assumptions there.

[Braulio]

6. I think he tends to shoot off the hip

And my analysis is flawless.

[Braulio]

5. Sorry, but you got it wrong

A) I don't hate anybody.
B) Brazil WILL produce more oil than Venezuela in the mid term. They will export their surplus oil, and WILL compete with Venezuela when placing the crude in the market. They can't help it. IF they join OPEC, which they may do, they'll be tagging along with Saudi Arabia, as the rest of OPEC does.

C) Market stability means just that - stable prices. When oil swings way up and way down, it's harder to make money trading it, it tends to bring in high stakes gamblers and speculators.

D) I doubt ExxonMobil will get too involved in Brazil, they don't have an advantage such as say Petrobras or British Gas do. However, the Brazilian discoveries are so large, it's possible EM will try to get in there to dabble a bit. But they won't amount to much.