Oil Production Falls in Venezuela Under Chavez

[Toro]

And will continue to fall with the seizures of drilling equipment owned by private interests given that PdVSa was unable to pay its debts.

As Venezuelan troops this month seized the assets of oil service contractors, the fable of the goose that laid the golden eggs again made the rounds of conversations among oil executives.

Venezuela’s oil industry may not be dead, as was the fate of the goose in the fable, but the latest round of nationalisations could prove a near-fatal blow, oil executives warn.

Analysts believe the move could reduce the country’s production to lows not seen for 20 years and prompt a significant shift in power that will redefine the relative importance of Latin America’s oil producers.

In fact, the oil service contractors were not the first to suffer under the drive of Hugo Chavez, Venezuela’s populist president, to use the country’s oil wealth for social programmes and to increase his influence among neighbouring countries.

During his decade in power, Mr Chavez has decimated PDVSA, Venezuela’s national oil company, which in the 1990s ranked as one of the world’s best-run. And as oil prices rose from about $20 to $147 a barrel in the past decade, he wrested control of Venezuela’s oil fields back from international oil companies before turning his sights to the oil service sector.

All this has had a profound effect on the country’s ability to produce oil. Output has dropped from 3.4m just before Mr Chavez came to power in 1999 to barely more than 2m barrels a day today.

FT.com / Reports - Latin America: Revolution that killed the fabled golden goose

 

[waltky]

For confiscating company assets during a wave of nationalizations...

Panel rules Venezuela won't have to pay $1.4B to Exxon Mobil
Mar. 10, 2017 | WASHINGTON (AP) — A World Bank arbitration panel has determined that Venezuela will not have to pay $1.4 billion to Exxon Mobil Corp. for confiscating company assets during a wave of nationalizations.

The Washington-based panel issued a ruling that annulled most of the $1.6 billion judgment against Venezuela. The decision was celebrated in Caracas, where the socialist government of President Nicolas Maduro is facing a cash shortfall triggered by collapsing oil production.

Exxon Mobil had asked the bank's investment dispute panel for $16.6 billion for the seizure of its Cerro Negro facilities in the Orinoco Basin under then-President Hugo Chavez. A lawyer for Venezuela said Friday that the decision was "correct and courageous."

An Exxon Mobil spokesman said the panel affirmed an award of $180 million plus interest related to the expropriation of some assets. He said the company was evaluating the panel's overall decision to determine its next steps.

Panel rules Venezuela won't have to pay $1.4B to Exxon Mobil