Chávez, Exxon play oil-price brinkmanship

Just two weeks after saying he hoped oil prices would “stabilize” at under $100 a barrel, Venezuelan President Hugo Chávez this week threatened to send them soaring to $200 a barrel in response to his growing dispute with Exxon. Chávez called Exxon’s threat to freeze the assets of Venezuela’s state oil company PDVSA part of Washington’s “economic war” against his government, and vowed that Venezuela would not be intimidated. “They will never rob us again, those bandits of ExxonMobil, they are imperialist bandits, white collar criminals, corruptors of governments, over-throwers of governments, who supported the invasion and bombing of Iraq and continue supporting the genocide in Iraq,” he said on his weekly TV show “Aló Presidente” Feb. 11.

“If you freeze us, if you really manage to freeze us, if you damage us, then we will hurt you,” said Chávez. “Do you know how? We are not going to send oil to the United States… Take note, Mr. Bush, Mr. Danger. If the economic war continues against Venezuela, the price of oil will reach $200. Venezuela will take up the economic war and more than one country is inclined to join us.”

Last week, Exxon won temporary court orders in the UK, Netherlands, and Dutch Antilles to freeze PDVSA assets worth up to $12 billion, in a dispute over compensation for a 41.7% stake (worth $750 million) in Venezuela’s Cerro Negro exploration project, which was nationalized last May. Other companies, including Chevron, BP, Total and Norway’s Statoil, negotiated deals with Venezuela to remain on as minority partners in the Orinoco oil belt projects. But ExxonMobil and ConocoPhillips rejected the changed terms and have been in compensation talks with PDVSA. A spokesperson for ConocoPhillips said they are seeking an “amicable resolution” with Caracas.

Venezuela is the USA’s fourth largest oil supplier after Canada, Saudi Arabia and Mexico. According to the latest figures from the US Energy Department, Venezuela accounted for 12% of crude imports in November, supplying some 1.23 million barrels a day.

Nicaragua‘s President Daniel Ortega backed up Chávez, saying Exxon’s threats together with recent comments by US National Intelligence Chief, Mike McConnell showed “a clear imperialist offensive against Venezuela.” Added Ortega: “What I want to say to President Chavez and to the Venezuelan people is that they can count on the unconditional solidarity and approval of the Nicaraguan people.” (VenezuelAnalysis, Feb. 11)

Possibly playing “good cop” to Chávez’s “bad cop” in a calculated strategy, the next day Venezuelan deputy oil minister Bernard Mommer said curtailing supplies to the US is “feasible” but would hurt both nations’ economies. Asked on state TV if it was desirable to cut off supplies, Mommer replied: “No. It would cost us money and would cost the other side money too.” Exxon too said Feb. 12 it was interested in pursuing dialogue with Venezuela to negotiate fair compensation for its stake in the project. Global oil prices, which rose upon Chávez’s threats the previous day, dropped upon Mommer’s softer statements. (Reuters, Deb. 12)

In his annual report to Congress Feb. 5, National Intelligence Director McConnell singled out Venezuela as leading an anti-US trend in Latin Amrica, and accused the country of sheltering cocaine smuggling routes. (VOA, Feb. 6)

See our last posts on Venezuela and the global struggle for control of oil.