Re: (OPE-L) Re: Paresh Chattopadhyay 'Capital, The Progenitor of Socialism'

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Mon Dec 22 2003 - 02:09:58 EST

>         Three questions:
>                 (1) What do you propose that revolutionaries in Venezuela do?
>                 (2) What do you propose that revolutionaries in Cuba do?
>                 (3) How does Paresh's position on the reasons for failure
>of the USSR, etc differ from that of Rosenberg?
>                         in solidarity,
>                          michael

Revolutionaries in Venezuela?  I am not sure. See article below. And
isn't the question how absence of revolution circumscribes the
options in Cuba? What possibly in common could Chattopadhyay's and
Rosenberg's analysis of the demise of Bolshevism have in common?



December 19, 2003

Venezuela Tries to Lure Oil Investors

ARCELONA, Venezuela - Outside this coastal city, just north of
Venezuela's richest oil and gas fields, storage tanks brim with
petroleum products, a network of pipelines hum with crude, and
tankers load at the rate of 18,000 barrels an hour.

President Hugo Chávez, a leftist populist who has cast himself as one
of the world's leading voices against globalization, celebrates
installations like this oil refinery as a national patrimony beholden
only to Venezuela's 25 million people.

But the fact is that the oil that flows through here is pumped
largely by foreign companies, many of them American, including Exxon
Mobil, ChevronTexaco and ConocoPhillips, and the tankers are bound
for the United States. Moreover, if the government's long-range plans
take hold, the world's biggest energy companies will increasingly be
the ones paying for the extraction of fossil fuels in this
energy-rich country.

Mr. Chávez's government has apparently succumbed to reality: the
government oil company, Petróleos de Venezuela, battered a year ago
by an anti-Chávez strike, simply does not have the capital to go it

So despite the image Mr. Chávez has cultivated in his five years as
president, the government is aggressively seeking foreign investors
to expand oil production and develop the emerging natural gas
industry. The policy, outlined in public documents and in interviews
with oil company executives, has irritated some of the president's
more leftist backers while apparently veering Venezuela back to the
course it pursued years before he took office.

"For all its rhetoric, the truth is that this government has treated
investors with preferential treatment, and has been careful not to
alienate investors too much," said Rafael de la Fuente, chief Latin
America economist for BNP Paribas in New York. "So you've had this
ironic situation where Chávez has been knocking on foreign investors'
doors and telling them: 'Come to Venezuela.' "

Indeed, oil activity by Pdvsa, as the $42 billion government oil
giant is known, declined 12.2 percent in the third quarter compared
with the third quarter of 2002, according to Venezuela's central
bank, while private oil industry activity shot up 30.2 percent. State
oil export volumes fell 27.4 percent in the period, but exports by
private oil companies, including American ones, rose 37.7 percent,
according to balance of payments data released by the bank.

In all, more than a third of the oil produced in Venezuela is
produced by private companies, about a million barrels daily, up from
400,000 before Mr. Chávez became president.

The emphasis on multinationals may come as a surprise to many people
around the world, given Mr. Chávez's harsh criticisms of
globalization and of Washington's initiatives for a hemispherewide
trade agreement. South American countries must take more control of
their fossil fuels, he says, possibly forming a continentwide energy
company. He was also supportive of Bolivian indigenous groups in
their fight against a foreign-backed project to develop natural gas
in that Andean country. The protests eventually prompted the Bolivian
president, Gonzalo Sánchez de Lozada, to resign in October and made
uncertain the future of a proposed $5 billion pipeline to export
natural gas to the United States and Mexico.

In Venezuela, though, the government's oil policy is seen as
pragmatic, aimed at obtaining capital to help Pdvsa grow while
providing the revenues needed to finance the government's antipoverty

"In a country with a big debt, in a country that needs lots of social
investments, it is obvious that we are open to associating ourselves
with the people who can bring the capital," said Nelson Martinez, who
oversees Pdvsa's operations in the eastern part of the country.

Ever since a two-month oil strike that shuttered oil production ended
in February, Pdvsa has been working to assure investors that the
country is stable and that its most important company is back to
normal. Mr. Chávez's government fired 18,000 striking workers and
slowly reactivated production to prestrike levels, more than three
million barrels a day, while increasing the role the energy and mines
ministry plays in making important decisions, Pdvsa officials say.
(Some industry and financial experts say that daily output figure is

Venezuelan oil officials have staged a conference for oil executives
in Houston, met with Wall Street analysts and had breakfast in
Washington with members of Congress from oil-producing states.

"It's been a huge public relations offensive for the last year," said
David Voght, managing director of IPD Latin America, a consultant to
oil companies operating in Venezuela. "There's a higher level of
interest by investors in Venezuela because the government has just
been out there drumming up business."

In the vast fields south of here, Exxon Mobil, ChevronTexaco,
ConocoPhillips, Statoil of Norway and Total of France already operate
ventures with Pdvsa.

The crude in those fields, spread across a flat landscape of
grasslands known as the Orinoco Belt, is heavy and gelatinous, and
thus highly expensive to extract and refine. But there is so much of
it - oil officials claim hopefully that there is more than in all of
Saudi Arabia - that Pdvsa is expecting these multinationals and
others to expand operations.

The company is also negotiating with a range of other companies, from
little-known concerns like Harvest Natural Resources of Houston to
giants like Petróleo Brasileiro, which has announced that it will
spend $1.3 billion in the next decade to double production in
Venezuela. Increasingly, Pdvsa speaks of foreign companies developing
some of the country's most important finds.

Meanwhile, Venezuela is moving to finish auctioning offshore blocks
to companies to develop the country's 147 trillion cubic feet of
natural gas, by far the largest estimated reserves in Latin America.

Statoil and ChevronTexaco already have won licenses to explore two of
the five blocks that make up the Deltana Platform project near
Trinidad's maritime border, off the eastern coast of Venezuela. The
government says that by early next year it also will offer seven
natural gas blocks to bidders in western Venezuela, near Colombia.

Royal Dutch/Shell, meanwhile, is considering spearheading development
of Mariscal Sucre, a $2.7 billion project that includes offshore
drilling for natural gas, a network of pipelines and a liquefied
natural gas plant on the eastern Paria Peninsula.

In all, Pdvsa says it needs to invest $36 billion from now until 2008
to reach a production capacity of 4.4 million barrels of oil a day
and to develop Venezuela's gas fields, according to filings with the
Securities and Exchange Commission.

The company has permitted multinational companies to operate oil
fields for a fee since the early 1990's. By the end of the decade,
Venezuela had begun developing the Orinoco Belt with four so-called
strategic associations that allowed companies to operate under a
preferential tax and royalty structure. Now, the government is hoping
foreign concerns will ramp up production even more.

Under the company's five-year plan, detailed in the S.E.C. filings,
production from 33 oil fields operated by foreign companies for a fee
will increase to 630,000 barrels daily by 2005 from 481,000 barrels a

The Orinoco Belt's heavy oil projects, meanwhile, will increase
output from about 450,000 barrels a day to 600,000 within the next
year, Pdvsa executives said. The state company's business plan also
expects 460,000 barrels a day by 2010 from eight other fields in
other parts of the country that are still being developed.

The United States, as it tries to lessen its reliance on the Middle
East, will benefit if more oil is produced here. "We need them, and
they need us," said Larry Goldstein, president of the Petroleum
Industry Research Foundation, an industry-supported consultant in New

This is not to say that Venezuela is ideal for investment.

Mr. Chávez's government raised its royalty rates to 30 percent from
16.7 percent through its 2001 hydrocarbons law and limited foreign
participation in new oil projects to a 49 percent stake, though
refining and gas projects can be controlled fully by foreign

And Pdvsa, a partner for the foreign oil concerns, is still suffering
from the after-effects of the strike. Fields and equipment damaged in
the shutdown were also damaged in the reactivation as an
inexperienced and understaffed labor force tried to resume production
under intense pressure. The firing of so many workers, half the
company's prestrike total, has also meant the loss of crucial
institutional knowledge.

The S.E.C. filings noted that net income had fallen precipitously, to
$2.59 billion last year from nearly $4 billion in 2001. Revenue slid
8 percent, to $42.6 billion.

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