Chavez' government is on the point of culminating the renegotiation of contracts with the oil companies, already signed by the previous administration, in the decade of the nineties, when international prices were a third or a quarter of where they stand presently. Chavez threated the companies with the loss of their concessions —a daily production of 500,000 barrels of oil— if the failed to accept the changes before December 31.
Of the 32 companies involved in the renegotiation, 22 (of the smallest) already accepted the changes some weeks ago. The negotiations were extended, on the other hand, with the biggest international oil companies. According to the latest news, Total (France), ENI (Italy), Chevron-Texaco, Shell and British Petroleum have accepted the conversion of their contracts. The only company that refused to do so, Exxon, has just sold its operations in Venezuela to Repsol. Although the details of the contracts have still to be ironed out, the concessionary accords now in force will give way to mixed companies, in which PDVSA will have at least a participation of 51 percent. The royalties will go from 1 percent to 30 percent and the tax rate will rise to 50 percent from its current level of 34 percent. A series of restrictive norms on the expenses which the companies are allowed to declare as tax free will also be implemented.
The comparison of the terms in the old and the new contracts gives an idea of the spectacular “extra” profits the oil companies have been pocketing. The contracts signed in the prior international economic context had as their point of reference oil prices at 10 or 15 dollars a barrel. Chavez has joined, actually quite late in the day, a tendency already initiated by other governments. “the reality is that in recent years, oil firms have lost market power relative to countries with hydrocarbon reserves, and Mr Chávez's government is only doing the same as others worldwide, from Russia to North Africa” (The Economist, 12 November). The English weekly adds that the kind of joint-ventures resisted by the oil companies in Venezuela is what these same corporations “happily agreed elsewhere” (ídem).
The oil companies that have given in to government pretensions have received in exchange a series of concessions. The old contracts became void at the earliest after seven years. With the new contracts, the oil companies were assured of 40 years of exploitation and, above all, the availability of enormous reserves; they gain access to other business opportunities such as liquid gas and receive a green light to explore the Orinoco basin, where the world's principal heavy oil reserves are to be found.
One of the companies which has gone after these accords the most is Repsol, which has closed strategic accords which suppose an increase in oil production of 60 percent. The accords contemplate Repsol's participation in the principal Venezuelan Liquid Natural Gas project and includes its installation in the Orinoco basin with a megaproject. For this latter investment, Repsol will join with the US Chevron-Texaco, with whom it has just signed a letter of intent. If the agreement with the Spanish was exhibited by some of his followers as a step towards the independence of Venezuela from the US orbit, the aforementioned project serves to prick the bubble of this expectation. Moreover, US finance capital controls, through the Stock Market, 70% of Repsol's shares.
These accords reveal that the project of Latin American “emancipation” through the partnership of PDVSA with other state-owned oil companies is nothing more than a project of selling out to the international conglomerates of the enormous reserves of Latin American gas and oil, especially in Peru, Bolivia and the Atlantic continental shelf. This is what Kirchner is trying to do with Enarsa: associate it with the conglomerates through the concession of the Mar Argentino and enormous subsidies.
This is what Evo Morales will try to do in Bolivia: “re-found” YPFB in order to dissimulate the sellout of the gigantic Bolivian reserves through partnership agreements.
In opposition to this nationalist variation of making concessions to the oil conglomerates, we put forward the nationalization without compensation of Latin American hydrocarbon reserves and the formation upon this basis of a Petrosur under workers and peasants administration.