Archive for September 12th, 2003

Back to the signing board

September 12, 2003

 


The Venezuelan Electoral Board decided today to reject the signatures submitted by the opposition to request a recall referendum for President Hugo Chavez. The expected decision was based on a number of technicalities, which will certainly be challenged by someone in the opposition. Prominently among them, the CNE cited that the request for a referendum has to be addressed to the Electoral body, which was not done in the petition submitted by the opposition. Additionally, the CNE ruled that the gathering of the petition was untimely, colliding with the time frame established by the Constitution for requesting a recall referendum. Finally, the CNE said the data contained in the petition itself was insufficient.


 Rumors of the negative decision by the CNE were widespread all week, as the recommendation by the legal department of the electoral body had leaked to the press. Súmate and the Democratic Coordinator have already drawn plans to gather the signatures anew, an event which is now planned for September 28th., as long as the CNE issues the regulations before that date, which it ahs promised to do.


The decision falls within the Government’s strategy of delaying the recall referendum using legal maneuvers. In this case, the law limited the length of the possible delay by the fact that the CNE had to reply to the request for the referendum within thirty days.


From the point of view of the opposition the decision might actually be quite positive, despite the delay it implies. By gathering the signatures again, the opposition will adjust the petition to the CNE’s requirements, making it more difficult for the Chavistas to question it legally later, and in effect shielding the petition from legal questioning. Similarly, by holding a new “Firmazo”, where the signatures will be massively gathered on a single day, that public display will become in itself a judgment on the Government. In February, the opposition gathered over 3 million signatures of which Súmate certified 2.8 million in its audit; this is 20% more signatures than required to validly request a referendum. Given the increased dissatisfaction and frustration with the Government and the continued deterioration of the economy, the opposition might gather more signatures this time than the votes necessary to recall Chavez’ mandate. Under the Bolivarian Constitution more voters have to vote for the recall than the number of votes received by the officer when he was elected.


I will comment more on the decision tomorrow when I have the full text. I am concerned about some of the reasons given, it seems to me that technicalities not previously defined by the law have been considered more important than the will and rights of close to three million people.

Article in the WSJ

September 12, 2003

Sorry for not posting much this week, I have had a  mild cold that has nevertheless drained a lot of energy and limited my time and capacity to contribute, but beware, I am back!


Article by Marc Lifsher in the Wall Street Journal about the increasing dependence of Venezuela on foreign oil firms in contrast with Chavez’ claim that he was making PDVSA The people’ company” Since it is by subscription here is the full article:


 


CARACAS, Venezuela — This country’s leftist president, Hugo Chavez, likes to talk about turning the state oil monopoly into a “people’s company.” But in reality, Venezuela is becoming increasingly dependent on foreign companies to boost lagging production.


An anti-Chavez strike at the state oil company in December and January led to the dismissal of 18,000 workers. Critics charge that it also stripped Petroleos de Venezuela SA, or PdVSA, of the expertise and financial wherewithal to maintain natural-gas and oil fields and explore new ones. Venezuela‘s oil output, which was about 3.2 million barrels a day before the strike, is now 3.3 million barrels, PdVSA officials claim. But international oil experts peg output much lower, at 2.5 million to 2.8 million barrels a day.


Meanwhile, they figure crude-oil production by foreign companies has soared to between 800,000 and one million barrels a day compared with 360,000 barrels when Mr. Chavez became president in 1999. Although PdVSA’s petroleum activity contracted year-on-year 7% in this year’s second quarter, private-sector activity jumped 46%, according to Venezuela‘s central bank.


“PdVSA has been weakened to such a level now that it has to rely on the private sector to maintain or increase production,” says David Voght, a Caracas-based consultant with IPD Latin America. Officials at the Ministry of Mining and Energy, which speaks for PdVSA on policy issues, didn’t respond to repeated requests for comment.


Venezuela nationalized its oil industry in 1976, effectively closing it to foreign companies. However, in the mid-1990s, Caracas began allowing limited foreign investment for revitalizing older fields and developing new technology to tap deposits of tar-like heavy oil. While Mr. Chavez honored those contracts, he signed legislation in 2001 that was seen as a disincentive to investment because it greatly increased royalties on crude oil. At the same time, he approved a bill that opened natural-gas business to foreigners.


While interest in new crude-oil ventures has been tempered by the higher royalties, an increasing number of foreign firms are testing the waters as Venezuela opens a second round of competition for offshore natural-gas leases. Thirteen companies, including such distant actors as Russia‘s OAO Lukoil, bought data packages.


ConocoPhillips has been particularly aggressive in Venezuela. The Houston-based firm is operating two heavy-oil projects, developing a large oil-and-gas field near Trinidad and exploring for natural gas, along with ChevronTexaco Corp., near the mouth of the Orinoco River. Exxon Mobil Corp. and Royal Dutch/Shell Group are also active.


In the wake of the strike, Mr. Chavez vowed to create a “patriotic” PdVSA that “belongs to the Venezuelan people.” But the president’s bluster is tempered with practicality; he needs outside help to keep exports flowing out and dollars flowing in. In fact, his trip to the United Nations this month will include a stop in Houston to meet with U.S. oil executives.


Oil revenue is more important than ever for Mr. Chavez. After surviving a coup attempt in April 2002 and the strike eight months later, he is relying on government spending to boost his popularity and defeat a possible recall election. The ranks of Chavez opponents, who label him an authoritarian, have swelled as the economy has contracted. Polls indicate that two-thirds of eligible Venezuelans would vote to oust Mr. Chavez in a constitutionally sanctioned recall vote that could come as early as December.


“His prime interest is remaining in power, and that leads to a very pragmatic form of nationalism,” says David Hobbs, the London-based director of exploration and production strategy for Cambridge Energy Research Associates.


Venezuela wants to attract more foreign investment, especially in the exploration and development of offshore natural gas, but only on its own terms, says Fadi Kabboul, energy counselor at the Venezuelan Embassy in Washington. “There’s no question that we’re looking for someone to help, but Venezuela is not desperate,” he says. “These are strategic decisions.”


 My comment on this and what I have been reporting on the country’s reduced oil production: Separately the IEA (International Energy Agency) reported this week that Venezuela was producing 2.25 million barrels of oil a day, close to one million barrels of oil a day less than what the Government has been claiming and consistent with what has been reported here. The discrepancy is quite clear if one compares the Central bank’s report for the second quarter 2003 with the second quarter 2002. In 2Q 2003, the average oil price for the Venezuelan basket was close to US$ 26 compared to US$22 in the same quarter. But in the same quarter 2003 Government oil exports in US$ were down 25% for the same period, but the Government claims it is exporting an equal amount of oil! Similarly, OPEC’s web site says that in July Venezuela produced 2.5 million barrels of oil a day……

Article in the WSJ

September 12, 2003

Sorry for not posting much this week, I have had a  mild cold that has nevertheless drained a lot of energy and limited my time and capacity to contribute, but beware, I am back!


Article by Marc Lifsher in the Wall Street Journal about the increasing dependence of Venezuela on foreign oil firms in contrast with Chavez’ claim that he was making PDVSA The people’ company” Since it is by subscription here is the full article:


 


CARACAS, Venezuela — This country’s leftist president, Hugo Chavez, likes to talk about turning the state oil monopoly into a “people’s company.” But in reality, Venezuela is becoming increasingly dependent on foreign companies to boost lagging production.


An anti-Chavez strike at the state oil company in December and January led to the dismissal of 18,000 workers. Critics charge that it also stripped Petroleos de Venezuela SA, or PdVSA, of the expertise and financial wherewithal to maintain natural-gas and oil fields and explore new ones. Venezuela‘s oil output, which was about 3.2 million barrels a day before the strike, is now 3.3 million barrels, PdVSA officials claim. But international oil experts peg output much lower, at 2.5 million to 2.8 million barrels a day.


Meanwhile, they figure crude-oil production by foreign companies has soared to between 800,000 and one million barrels a day compared with 360,000 barrels when Mr. Chavez became president in 1999. Although PdVSA’s petroleum activity contracted year-on-year 7% in this year’s second quarter, private-sector activity jumped 46%, according to Venezuela‘s central bank.


“PdVSA has been weakened to such a level now that it has to rely on the private sector to maintain or increase production,” says David Voght, a Caracas-based consultant with IPD Latin America. Officials at the Ministry of Mining and Energy, which speaks for PdVSA on policy issues, didn’t respond to repeated requests for comment.


Venezuela nationalized its oil industry in 1976, effectively closing it to foreign companies. However, in the mid-1990s, Caracas began allowing limited foreign investment for revitalizing older fields and developing new technology to tap deposits of tar-like heavy oil. While Mr. Chavez honored those contracts, he signed legislation in 2001 that was seen as a disincentive to investment because it greatly increased royalties on crude oil. At the same time, he approved a bill that opened natural-gas business to foreigners.


While interest in new crude-oil ventures has been tempered by the higher royalties, an increasing number of foreign firms are testing the waters as Venezuela opens a second round of competition for offshore natural-gas leases. Thirteen companies, including such distant actors as Russia‘s OAO Lukoil, bought data packages.


ConocoPhillips has been particularly aggressive in Venezuela. The Houston-based firm is operating two heavy-oil projects, developing a large oil-and-gas field near Trinidad and exploring for natural gas, along with ChevronTexaco Corp., near the mouth of the Orinoco River. Exxon Mobil Corp. and Royal Dutch/Shell Group are also active.


In the wake of the strike, Mr. Chavez vowed to create a “patriotic” PdVSA that “belongs to the Venezuelan people.” But the president’s bluster is tempered with practicality; he needs outside help to keep exports flowing out and dollars flowing in. In fact, his trip to the United Nations this month will include a stop in Houston to meet with U.S. oil executives.


Oil revenue is more important than ever for Mr. Chavez. After surviving a coup attempt in April 2002 and the strike eight months later, he is relying on government spending to boost his popularity and defeat a possible recall election. The ranks of Chavez opponents, who label him an authoritarian, have swelled as the economy has contracted. Polls indicate that two-thirds of eligible Venezuelans would vote to oust Mr. Chavez in a constitutionally sanctioned recall vote that could come as early as December.


“His prime interest is remaining in power, and that leads to a very pragmatic form of nationalism,” says David Hobbs, the London-based director of exploration and production strategy for Cambridge Energy Research Associates.


Venezuela wants to attract more foreign investment, especially in the exploration and development of offshore natural gas, but only on its own terms, says Fadi Kabboul, energy counselor at the Venezuelan Embassy in Washington. “There’s no question that we’re looking for someone to help, but Venezuela is not desperate,” he says. “These are strategic decisions.”


 My comment on this and what I have been reporting on the country’s reduced oil production: Separately the IEA (International Energy Agency) reported this week that Venezuela was producing 2.25 million barrels of oil a day, close to one million barrels of oil a day less than what the Government has been claiming and consistent with what has been reported here. The discrepancy is quite clear if one compares the Central bank’s report for the second quarter 2003 with the second quarter 2002. In 2Q 2003, the average oil price for the Venezuelan basket was close to US$ 26 compared to US$22 in the same quarter. But in the same quarter 2003 Government oil exports in US$ were down 25% for the same period, but the Government claims it is exporting an equal amount of oil! Similarly, OPEC’s web site says that in July Venezuela produced 2.5 million barrels of oil a day……

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