Let’s Confiscate Venezuela’s U.S. Refineries

I recall reading this story a while back:

Chavez Considers Sale of U.S. Refineries

The implications just sank in today. Chavez, having confiscated the property of U.S. companies and torn up contracts, has property here in the U.S. Why don’t we just confiscate Venezuela’s Citgo refineries as compensation, or make them sell the refineries for half price? Isn’t turnabout fair play? From the article above:

“Not one Venezuelan works at these refineries,” Chavez said in Buenos Aires yesterday, according to Venezuela’s Communication and Information Ministry. “They don’t give us one cent of profit. They don’t pay taxes in Venezuela. This is economic imperialism.”

Citgo Petroleum Corp., the U.S. fuel-making unit of Petroleos de Venezuela, owns four U.S. oil refineries and two asphalt plants, with a combined daily crude processing capacity of 756,000 barrels. The company also operates a 265,000 barrel-a- day refinery in Houston that’s a joint venture with Lyondell Chemical Co. and has more than 13,500 U.S. retail fuel outlets.

Well, I think I have a solution. The U.S. will just take those refineries off your hands, in the same way that you have confiscated investments that were made by U.S. companies in your country.

On that topic, Jim Mulva was recently interviewed by Financial Times:

Conoco holds out on Venezuela terms

Jim Mulva, chief executive of ConocoPhillips, the third largest US oil company, is holding out against the terms under which Venezuela is expropriating the company’s oil assets and the commercial terms under which they will be managed.

Mr Mulva said the sticking points related to the fact that Conoco invested in the country’s energy projects but is now being left with less than it originally paid for.

As I have pointed out before, it’s not the nationalization I have a problem with. It’s the theft of the infrastructure that the companies built. It is that the nationalization followed companies (and not just U.S. companies) being invited in to invest billions in the development of Venezuela’s heavy oil fields. Venezuela could not afford to do it themselves, as this is very expensive. After the investments starting paying off, Chavez tore up the contracts, demanded a majority position, and doesn’t want to compensate the companies. As I wrote over at The Oil Drum:

It won’t take too long before everything is nationalized, and he has no more coffers to plunder and then must count on the revenue from the industries he has already plundered. Then, to his chagrin he finds that they aren’t producing like they used to, because he hasn’t invested in the infrastructure. But some people have this fairy-tale vision where he is just looking after the poor. That wouldn’t even be possible if not for the investments the oil companies have already made. And with his threat today to nationalize the banks, I think companies are going to be very cautious about investing money in Venezuela.

But, since he has assets in the U.S., maybe that’s a bargaining chip. And it is one I haven’t heard anyone mention in this context.

Disclaimer: I am not a disinterested party here. I own shares in one of the companies whose assets have been seized. (Then again, so do most people with a pension fund, 401K, etc.) So maybe we demand Citgo as compensation. If this goes to arbitration, that would be a position I might take. Or, to prevent it from going to arbitration, maybe Chavez might we willing to trade some U.S. refineries for assets on the ground in Venezuela.

32 thoughts on “Let’s Confiscate Venezuela’s U.S. Refineries”

  1. Robert – I am sure you are expressing your sense of frustration with the expropriation of assets and aren’t serious about taking refineries. Unlike some countries, the U.S. vigorously protects property rights, and believes in the sanctity of contracts and the rule of law.

    I think a more likely outcome is that arbitration might result in some kind of asset swap. I would think that any sale of US refining assets would require SEC anti-trust review. So it may be that companies in the U.S. have some leverage.

    Besides, it won’t be long until those fields are in disrepair and the new operators will need knowledge. They MAY be able to hire some help, but if I were in the position to sell it to them it would be very expensive.

    The following link makes some good points: Moratorium on Brains

  2. Unlike some countries, the U.S. vigorously protects property rights, and believes in the sanctity of contracts and the rule of law.

    Of course we have been known to freeze assets. 🙂 I think the U.S. companies are in a slightly better bargaining position than Chavez thinks. Of course I have read lots of accounts where people imagine that the Chinese will just swoop in there and pick up where we left off.

    I hope JM plays hardball with him. And if Chavez doesn’t like the terms, then pull out and watch his revolution start to run short of cash.

    Cheers, Robert

  3. A less reactionary approach would probably be to let the disaffected corporations litigate Citgo in the US courts. That would avoid high-handed interference by the legislative branch.

    Typically US courts won’t allow suits against US corporations by foreign nationals, but I don’t think that holds vice versa.

  4. This isn’t meant to be alarmist, but there are a lot of socialist and nationalist attitudes in Canada.

    The provincial Crown Corporations (state owned) own the utilities as well as where I am an insurance company and where I work we are the major wireless, ISP and also own a security company, TV OIP and a few other businesses. At one point the province also owned an oil company and the local refinery is owned by a co-op.

    We also were the first province with universal medicare, unions in government, etc. We can fly direct to Cuba and buy their cigars.

    Although 1/3 of the gas and oil in Canada and sufficient refinery capacity are here and the minerals are generally in the Crown, we pay market price for gas at the pumps and for NG.

    When Katrina hit, even though we aren’t close to being in the affected supply chain we caught a large price jump. We had another this spring. It makes people question why if we have plenty of domestic supply and capacity we are paying more than the U.S. customer.

    At $1.13/L it’s a question. At $3/L it’s going to get strange and if we start having actually gas shortages, its hard to say how people and politics will react.

  5. Yes, let’s seize Venezuelan assets because we all recognize that one of the greatest injustices of our times is how American stockholders have been exploited by South American Countries. Oh, the horror!

    Oh, the irony!

    If a corporation does some work in a foreign coutry they have a right to be compensated for material labor, and some negotiated profit. They have no right to the natural resources of that nation. To claim so is unethical, immoral, criminal.

    Th Chavez government has a responsibility to the national security and economic future of it’s people — and not to the corrupt contracts worked out between US corporations and previous rulers.

    And if the US wants to seize Venezualen refineries, go ahead. But after you do, good luck finding Venezuelan oil to refine in them.

  6. They have no right to the natural resources of that nation. To claim so is unethical, immoral, criminal.

    Yet nobody suggested this, did they? As I have said many times, Venezuela’s natural resources belong to them. The infrastructure that U.S. oil companies put on the ground in Venezuela do not, no more than Citgo refineries belong to the U.S. But, if the U.S. did seize Citgo, it would be the same as what Chavez has done in Venezuela.

    And if the US wants to seize Venezualen refineries, go ahead. But after you do, good luck finding Venezuelan oil to refine in them.

    That’s coming regardless. Chavez has indicated that he wants to start selling to China instead of the U.S. I have no problems with that.

    Cheers, RR

  7. what I can’t understand is why he ddoesn’t do like everyone else. Leave the private companies be and charge an 80% net profit tax.

  8. US courts should look into the possibility of asset confiscation of course. That could bring some power to the negotiation table.

    Then again, US agencies can just assassinate Chavez, install a more friendly junta, put up fake elections or bomb the country to smithereens.

    No need to negotiate. Just take what you want.

    On a more serious note, I’m a little surprised that many seem to be thinking Venezuela is heading down to destruction with it’s recent decision.

    The argument, as I have understood it, seems to be that they will be starved for infra investments, left with crumbling assets, no skill to manage and no ability to produce oil. At least after a while.

    This would imply that:

    1) Chavez & Co are just plain ignorant and intellectually challenged (can’t even understand the challenge)

    2) They have no needed internal oil production skill or ability to source it from the market (i.e. have no skill to manage the challenge)

    3) They have no additional offers from Lukoil, Sinopec, Petrobras, etc. (i.e. can’t get investments from elsewhere)

    While 2 might have some comparative truth to it (compared to the best of breed of US oil workers), I don’t think 1 or 3 are true.

    There’ll be plenty of takers for Venezuela’s oil reserves by other companies.

    To think that nationalization of both fields and infra assets is somehow restrictive to how Chavez&Co can maneuver, is imho naive. It is a PR stunt with political motives.

    Actually owning the fields, assets and production 100% is of course, not what they are aiming for.

    The assets and infra don’t need to be fully Venezuelan owned. As long as people think they are.

    There can be all sorts of PSA and infra investment deals with Russians, Chinese, etc.

    In this light, all this talk about Venezuelan oil production dropping into abyss immediately amount to no much more than trash talk, imho.

    Of course, I’m just an amateur and you are oil industry professionals, but I urge you to consider this possibility as well (if you haven’t already).

    It’s more politics and PR than actual oil production decisions. At least to me.

  9. I take it RR is just venting his frustration, though depending upon how it all actually plays out later perhaps the agrieved corporations could find some recourse in courts.

    From my (outsider) perspective it appears as if Chavez really would prefer political antics (to boost his own image) rather than a real win-win situation. He evidently doesn’t believe in a non-zero type of society (socialists basically don’t, they believe in a zero sum game.)

    And, while I am sure he will get plenty of offers of help from the Chinese should Venezuela’s native talent prove inadequate, Chavez is likely to find the Chinese very demanding (of performance) in the long run, simply because how much they really need the supply.

  10. Samu –

    1) Chavez & Co are just plain ignorant
    Perhaps, his recent handling of the food crisis shows his failure to grasp even basic economics. The only thing he seems to know how to do is bully and threaten to nationalize anything or anyone that gets in his way. Chavez failed to listen to his own economic advisors.

    2) They have no needed internal oil production skill or ability to source it from the market (i.e. have no skill to manage the challenge) Before Chavez, PDVSA was barely competent. PDVSA was basically producing fields discovered prior to nationalization in the 1970’s. An amateur could drill those wells with some reasonable success. The Orinoco is an entirely different ball game. Chavez fired all the competent employees in PDVSA and replaced them with military officers or political lackeys. Skills and merit matter very little at PDVSA, ability to kiss el Jefe’s butt is the key to promotion.

    3) They have no additional offers from Lukoil, Sinopec, Petrobras, etc. ConocoPhillips owns 20% of Lukoil. Sinopec, CNOOC and other companies also rely on the major IOC’s for investment and technology. They need the IOC’s far more than they need an unstable crackpot dictator. Besides, Chavez has done this to the IOC’s what would keep him from doing the same to the NOCs.

    There’ll be plenty of takers for Venezuela’s oil reserves by other companies.

    Like who? The Russians and the Brazilians have their own fields to develop. Why invest in Venezuela when they can pump money into their local economy? Same with the Iranians, they can’t even develop and produce their own fields. The Chinese might be able to help, but it is a long way to ship crude from Venezuela to China. And they are limited to smaller crude tankers that can fit through the Panama Canal. One strategy the IOCs could follow is lock up all the excess crude tanker capacity.

  11. They need the IOC’s far more than they need an unstable crackpot dictator.

    That’s right, the US should install a more stable dictator that supports IOC investment and get those heavy oil fields really a pumpin’

    If you don’t, how is that guy gonna afford premium for his 5 cadillacs? What are they gonna put on the TV instead of “Pimp my Ride”? “Pimp My Public Transit”? “Pimp my Bicycle”? Where are you gonna get diesel and urea to grow that corn ethanol?

    _this is a joke, don’t flame me_

  12. This sort of theft is alas par for the course. I’m sure the companies took this risk into account when they made their investments, but it still sucks.

    Who wants to make a huge up-front investment that won’t pay off for years, then have it stolen? Or be accused of making unreasonable profits on investments that pay off by people who are nowhere to be seen when investments don’t pan out?

    It’s almost impossible for companies to replace their reserves without doing business in countries with questionable legal systems. I haven’t seen the oil majors as a great long-term investment, despite rising prices for oil and gas, and despite record time; they seem like they’re on borrowed time, with huge infrastructure investments required and dwindling prospects upstream.

    Not to mention morons both in and out of government that want endless cheap gasoline but don’t understand the high cost and risk of investing in refining capacity and in any case oppose construction of new refineries. We’ve become a bunch of whiny babies who want mommy to make the products we need magically appear, for nothing.

  13. I love the Venezuelan people and hope they find a way to emerge from this mess. Chavez has done some things right. By all accounts Venezuela should be the wealthiest country in South America. It has abundant natural resources, fertile farmland, it sits at the crossroads between 3 continents with good access to the EU and North American markets. Chavez instituted some land reforms (again through expropriation) which have stimulated agricultural production. He should be using Venezuela’s oil wealth to invest in other sectors of the economy instead of just giving the money away. The current system is only sustainable at high energy prices and high production rates. Venezuela should model itself after Malaysia, who is reinvesting its petrodollars in infrastructure and human capital. Up until the 1980’s oil price collapse, GDP growth in Venezuela rivaled Western Europe. Unfortunately, little of this lagresse was shared with the lower classes, and rampant migration to the cities exasperated the problems of the poor.

    It is hard to describe how broken Venezuela is. But very few institutions actually work there. Corruption and crime is endemic. The postal system is a joke and can’t be used for commerce. So everyone pays in person. Getting a license to legally operate a business is nearly impossible, so people don’t bother, leaving themselves open to selective enforcement (extortion) of the laws. Inflation prevents capital formation. The currency is a joke. The official exchange rate is 2,150 Bolivars to the dollar. The smallest paper bill is 500 Bolivars (25 cents). When I travelled there regularly you could still use a credit card at reputable businesses. But now you need to carry a suitcase full of cash just to go out for dinner. Some enterpeneurs were keeping financial assets outside the country as a hedge against inflation. But Chavez instituted currency controls, limiting foreign exchange. Paper Dollars and Euros are highly valued as an alternative to banks. I never saw a vending machine in all my trips – it would require constant emptying of the till!

    On one of my last visits, I had meetings at the Ministry of Energy. The building was in severe disrepair. It was a concrete and steel high rise, but the floors were not level and in some places the floor didn’t meet up even leaving tripping hazards. The elevator doors were broken on some floors. The flush toilets in the bathrooms didn’t work, so there was a 40 gallon trash can full of water with a pot to scoop up water to flush with. The manager we were seeing 4 seperate phones sitting on his desk. He had 2 business lines, and two other lines to different phone companies so he could call out to the field. He would “conference call” by holding up one phone to each ear.

    The barrios around Caracas are essentially no mans land run by local thugs. It is estimated that nearly half the electrical power in the city is stolen. You see thousands of illegal taps on the transmission lines. If the power company tries to shut off the lines the locals riot. Gasoline is cheap, $0.15/gallon and up until this year, leaded. Lead contamination along the freeways in Caracas is many times the safe levels, leading to learning disabilities in children. Things may have gotten better, but I can’t imagine it.

  14. At $1.13/L it’s a question. At $3/L it’s going to get strange and if we start having actually gas shortages, its hard to say how people and politics will react.
    Ahh, but that is the beauty of capitalism: no shortage ever develops, as supplies go down the price goes from $3/L to $4/L to $5/L, etc. until supply and demand matches up. This will get interesting…

  15. Ha! Robert Rapier cares so very much for the people of Venezuela (or, at least, for Venezuela’s oil).

    Weep, weep, weep for the oil corporations. These corporations have utilized American bombs & bullets to help the people of Iraq out of their dictator & their oil. Too bad that 150,000 Iraqis died in the process. (but, really, who cares about them?)

    Will America provide the same service for Venezuela?

    Please, Robert, help the people of Venezuela out of their oil. America’s oil corporations and shareholders are in desperate need of that cash. The people of Venezuela … well, they can enjoy the freedom of death!

  16. Following one of the links in the comments:

    “The companies ceding control included BP Plc, ConocoPhillips, Exxon Mobil Corp, Chevron Corp, France’s Total SA and Norway’s Statoil ASA. All but ConocoPhillips signed agreements last week agreeing in principle to state control, and ConocoPhillips said Tuesday that it too was cooperating.”

    Robert Rapier, are you speaking on behalf of your employer in this post?

    Does ConocoPhilips want George W. Bush to provide Freedom & Democracy to the people of Venezuela?

    If I were in a position to give Hugo Chavez advice, I would tell you to cease all oil exports to the United States of America immediately.

    That is also the advice which I would provide to the good Muslim people of the Middle East as they suffer the horrors of George W. Bush’s crimes against humanity on behalf of these same oil corporations.

    The impoverished people of the world need to deprive the obese Americans of the oil drug. Americans ought to suffer and learn to live without.

    The reduction of American economic activity would also serve other useful purposes: A poor America — a post economic collapse America — will be in no position to engage in military adventures overseas. Our navy would rust away in port, as it should.

    Since Americans lack discipline and self-restraint, the world must discipline and restrain us.

    Hugo Chavez is a better man than George W. Bush.

  17. These corporations have utilized American bombs & bullets to help the people of Iraq out of their dictator & their oil.

    Can you name the U.S. oil companies that are currently producing Iraqi oil?

    Boycotting sales of oil to the U.S. makes about as much sense as the proposed May 15 boycott of gas stations. Crude oil is a commodity. Refusing to sell it to certain markets only hurts the seller as they have to transport their crude to further markets. Venezuela could sell all its crude to China, who would then buy less from the middle east who might then sell more crude to Europe, which displaces production somehere else that ultimately gets sold to the U.S.

    In Mr. Chavez’s glorious workers paradise, how then can the markets be devoid of meat and sugar?

    Whiskey we’ve got – but where’s the meat?

    Or is this George Bush’s fault too? How can anyone believes these jokers can produce in the Orinoco?

    But I have the solution. Mr. Chavez will issue a decree that the oil must be where PDVSA puts its drill!

  18. “Venezuela could sell all its crude to China, who would then buy less from the middle east who might then sell more crude to Europe, which displaces production somehere else that ultimately gets sold to the U.S.”

    Have you considered the possibility that China could consume Venezuela’s oil as its own demand increases naturally, and therefore this would not free up any other oil for the gluttonous American market?

  19. Yes, Mr. Chavez and the Middle East countries could chose not to sell crude oil and refined products to the U.S. and only accept increases in consumption from China and the developing world. However, their economies are totally dependent on exporting crude oil. They don’t produce much of anything else. Nearly all the revenue into their governments comes from oil and gas royalties, taxes, and dividends paid by the national oil companies.

    Chavez can rail against the U.S. but the fact is the U.S. can ignore his rantings because in the end he is forced to sell oil into the world market or else his government and economy totally collapses. Venezuela without its oil is a 3rd rate banana republic.

    The U.S. on the other hand could chose to switch to lighter cars and trucks that get better gas mileage. At $60 oil we could convert coal and shale oil to transportation fuels (albeit at some cost to the environment). The US could stop exporting corn and wheat and turn anything we don’t eat into ethanol. What stops us now is not the technology or resources to do so, but the fact that if we did these things now the price of crude oil would collapse, and the investments would lose mone – and therefore too risky.

  20. Ha! Robert Rapier cares so very much for the people of Venezuela (or, at least, for Venezuela’s oil).

    I notice that while I have been laid up in a hospital bed in Aberdeen for the past 2 nights, uber-troll Dave Mathews has once again decided to infect my blog with his self-righteous and hypocritical bombast. Let’s cover a couple of points Dave. Not for you, because this has all been explained to you previously. First, I note in the essay that I am not a disinterested party. Second, I have explained to you multiple times that I do not speak on my employer’s behalf. Ever. They do not review anything I write, and they don’t tell me what to write. I do this on my time. But you already know this.

    This isn’t about their oil. Again, their oil belongs to them and I would love to cease all oil imports to the U.S. (If people like Dave Mathews didn’t use so much oil, we could do that). The companies were invited in to invest in the infrastructure, and now Chavez is seizing that. This is theft, and that is my objection. If he wants to pay a fair price for the infrastructure, or he wants to swap some U.S. assets, fine. Now, I understand that you have praised Chavez as a hero of the people at The Oil Drum, so you may not see any problem with his antics.

    Finally, once again I note your hypocrisy. Dave Mathews uses a great deal more gasoline than I do. That, I guarantee. Yet he is going to lecture me about exploiting Venezuela’s oil. Tell you what, Dave. When you stop using gasoline, then jump up on your soap box and lecture. Until them, STFU and don’t lecture your betters on how we need to get off of oil.

  21. I too hope that the parties in Venezuela can come to an amicable settlement and that the IOCs are compensated for their investment in capital and technical know how.

    To put this in perspective, Mr. Chavez came into power in 1999. The coup attempt was in April 2002. The IOCs continued to put billions in investment in Venezuela with assurances that they would not be nationalized. Now that the projects are up and running and making money, the government wants to take a greater percentage and take over operatorship.

  22. How many Venezuelans and Nigerians would you kill on behalf of big oil, Robert Rapier?

    Dave, that’s well over the line of what is acceptable here. Your rant has been deleted, and I reiterate that your hypocrisy is not welcome here. I have no problem with dissenting opinions. I do have a problem with what you just posted, which is disgusting. Please seek some help for your mental issues.

  23. Dave, I can delete them a lot faster than you can post them. And as long as you’re posting vacuous rants, I will continue to do so. And if necessary, I will institute moderation – on your behalf.

    Did you ever wonder why I can spot you immediately, even though you post anonymously? It’s because I have never run across anyone else with such a twisted outlook, and one willing to jump to immediate and firm conclusions about people he doesn’t know. You make sweeping generalizations about people you have never met. But you still fill up with gasoline at your local 7-11, and you think it’s not your fault that you are addicted to oil. You are an incredibly deluded hypocrite. It is your fault. You could choose not to be addicted to oil. Your life you be very hard. But then you wouldn’t be a hypocrite.

    Might I suggest a professional in your area? If you don’t have some competent mental health professionals in your town, try Carolyn Kubiak in Saint Petersburg. She may help you come to grips with your problem. But please, get yourself some help before we read about you on the evening news (and not in a good way). You are a very sick man.

    Incidentally, one of my nurses was Nigerian. We talked at length about the oil situation there, and the potential exploitation of the population. I also have 2 friends who are Nigerian, and we have talked about this situation. (You probably don’t even know any Nigerians). I would talk to you about that, but I learned long ago that your ignorance can’t be penetrated because of the iron-clad stereotypes you have erected. Of course if you ever chose to engage in discourse instead of bombastic monologue, you might just learn something.

  24. Dave, that last post of yours was more along the lines of what would be considered acceptable discourse. Had you started off there, instead of ended up there, I probably wouldn’t have moderated it.

    But what I would like to know, is what is Dave Mathews doing for the people of Venezuela? What is Dave Mathews doing for the people of Nigeria? What sort of moral & ethical obligations does Dave Mathews have to the people who really do suffer?

    The IOCs have invested money into the countries, and they have contributed tax revenues to the government. These tax revenues would have been unavailable without the investments of the IOCs, because the local governments could not afford to make the investments.

    In many cases, they have also donated money to various charities (I could give numerous examples). Has Dave Mathews done this? Or do Dave Mathews actions only amount to so much verbal fluff?

    Personally, what I want to see people like Dave Mathews do is to reduce the oil they consume so the U.S. will have no desire to do business in Venezuela. Cheer Chavez all you want. He is cutting his own throat by running off the very investors who have been providing him with tax revenues. I understand you are a fan of communism and all, but you do understand that this is a system that has not worked out too well?

    Now, I think I will leave comment moderation in place until tomorrow, and if you want to be civilized, come back and do engage in civil discourse. But at the first sign that you are once again teetering on the edge, you are out of here.

    Cheers, RR

    P.S. You will be happy to know that most of the poor and suffering in Venezuela and Nigeria have had nothing on me the past 3 days. I would have traded places with them in a heartbeat, and I am still in a great deal of discomfort. So you at least have that thought to comfort you.

  25. If any of you thought I was joking about Dave’s mental health (or doubted that I knew who was making those anonymous posts), you can see that he has carried this conversation over to Jim Kunstler’s blog:

    Dave Mathews’ Hypocrisy

    Now remember, this guy is preaching about the downtrodden of the world, but when I asked him what he is doing about it, he says “nothing.” He has complained about our addiction to fossil fuels, but has admitted to being addicted just like every else. And he is too poor to help out the needy, but admitted at The Oil Drum that he is not too poor to get over 200 channels on his satellite. In short, he is a classic example of the worst kind of hypocrisy, and he directs at people who are actually attempting to make the world a better place. What a loon.

    Cheers, RR

  26. Has Mr. Matthews travelled to either Venezuela or Africa? Or does he base his opinions on anti-capitalist anti-american websites?

    I suppose the IOCs are convenient scapegoats. So based on Mr. Mathews reasoning, the parts of Africa and South America that don’t have oil are peaceful paradises (Rwanda, Zimbabwe, Darfur, Ethiopia).

    Likewise in Mr. Matthew’s world, everywhere that IOCs operate they must bring disease, destruction, death and poverty to the people people (Norway, Vietnam, Malaysia, China, Australia, East Timor, Canada, UK).

    That is just silly. Poverty correlates very strongly with corruption. If anything the IOCs are a moderating influence on corrupt governments and public officials. US employees are bound by the Foreign Corrupt Practices act. OECD countries follow the Antibribery convention. It still happens occasionally even at the IOCs but it is the rare exception. If the IOCs didn’t operate at all in either Venezuela or Nigeria there would still be poverty and corruption. If we left the oil fields to the small non-western operators, the problems would be a lot worse.

  27. On a more positive note, in Saskatchewan, probably due to long term NDP government not being very enticing to investment, a lot of our oil and gas is under-developed.

    The uranium industry was dead here since the 1960’s and it is booming with the price increases. They are starting to develop the Saskatchewan tar sands, but I think there has been an under-exploration in this province due to “easier pickings” in Alberta and internationally.

    I would think as it gets more difficult for companies to operate in areas like Venezuela we will see more investment locally.

    CAPP Statistics

    CAPP on Saskatchewan

    A house down my street sold for twice what I paid 5 years ago and for the first time in 50 years, people are moving here from Alberta. Our population has floated at 1 million since the 1930’s.

    Lorne Calvert isn’t Chavez.

  28. If the IOCs didn’t operate at all in either Venezuela or Nigeria there would still be poverty and corruption. If we left the oil fields to the small non-western operators, the problems would be a lot worse.
    Well said! Ever wondered how incompetent the Nigerian government is, at all levels? How do you export oil at $60+/bbl, but stay poor?

    In the end, Africans need to solve African problems – nobody else can do it. Unfortunately, many seem to think Uncle Sam (and Europe) owes them a solution.

  29. Optimist – pop quiz. Who produces more oil per capita? Nigeria or the U.S.?

    The problem is even at $60 per barrel, there are too many Nigerians for too few petrodollars. Yet Nigerians fight over the oil spoils to the neglect of the rest of their economy.

    Nigeria, 129 million people, 2.45 million barrels per day. US 300 million people, 7.5 million barrels per day. You can do the math. Imagine how small the oil industry is to the U.S. and how few people it employs. Now imagine it accounting for nearly all the government revenues and 3/4 of the economy. You can see the problem.

  30. Robert — I stopped by for the first time today and found your very interesting blog. I myself have given up writing about these matters in the main, but I admire your intestinal fortitude in dealing with trolls like Dave. I have had to do the same as well, at times going so far as to shut down commenting.

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