Exxon, ConocoPhillips Say No to Chavez

[Die Neue Zeit]

[I posted this PDVSA stuff in this particular forum to solicit discussion from ALL posters on this board, not just fellow posters.]

In regards to today's news:

http://www.forbes.com/feeds/ap/2007/06/26/ap3859211.html

I really dislike all the media bias regarding today's story. Many mainstream news sites quoting AP did NOT quote the full AP article (because of bias).

Missing portions emphasized below:


Oil analysts don't expect any impact on world oil supplies or prices because they don't see any one company as having a major effect on Venezuela's overall production.

"It's not going to result in any less crude coming out of there," said Kevin Saville, managing editor for the Americas energy desk at Platts, the energy research arm of the McGraw-Hill Cos.

...

Despite the tougher terms, the government notes that the oil sector remains more open to private investment than in the past: Venezuela shut private companies out of the oil sector completely between 1975 and 1992 before beginning a series of partial privatizations. Chavez has indicated no plans to repeat a complete nationalization of the oil industry.

Venezuela also remains more open than many other oil-producing nations: three-quarters of the world's proven reserves are controlled by state monopolies that bar private participation completely.

Nobody on the right or in the media is calling for the Saudi government to privatize (even partially) Saudi Aramco. Nobody is calling for an end to the state monopoly on oil production there. Then there's the Saudi connection to the terrorists, but nobody's connecting the dots in the right places.

Yet lo and behold, poor Venezuela is being picked on because of its "people power" and standing up to US corporate interests. <_<

[For fellow posters, I know the difference between "people power" and "workers&#39; power," which is why I used the former.]



My take? Thankfully, I did some studying as of late to find out just how much these two US supermajors are shooting themselves in the foot:

http://www.marketwatch.com/news/story/stor...D8C%7D&dist=rss (http://www.marketwatch.com/news/story/story.aspx?guid=%7B424E1A8F-2EF9-40F1-A886-724D79355D8C%7D&dist=rss)


Even with oil prices down over 20% since peaking around &#036;77 a barrel last summer, the projects are generating extremely high internal rates of return and would likely remain profitable even if ownership stakes were ratcheted down to minority shares.

Exxon Mobil: Cerro Negro project, IRR of 32%

[Wow&#33; Expect other players for sure to dip into this pool to reap some profit, preferrably state-owned players from abroad.]

Conono: Hamaca and Petrozuala projects, IRRs of 27% of 17%, respectively


There are only a handful of countries left where international oil companies can search for untapped reserves, and dealing with politically volatile host nations has simply become another part of their risk calculation.
And while political risk is increasingly hard to navigate, Esteruelas explained it can still translate into huge returns, "provided you&#39;re willing to play ball with the state ... and accept that there&#39;s no sanctity of contracts."

Speaking of increased state roles in global energy for THE NEXT 30 YEARS:

The new Seven Sisters: oil and gas giants dwarf western rivals (http://www.ft.com/cms/s/471ae1b8-d001-11db-94cb-000b5df10621,dwp_uuid=0bda728c-ccd0-11db-a938-000b5df10621.html)

Study: Future Oil Production Dependent on State-Owned Oil Companies (http://www.voanews.com/english/archive/2007-03/2007-03-02-voa3.cfm?CFID=93480823&CFTOKEN=26580846)



[And I&#39;ve got more links for discussion on this subject.]

[Die Neue Zeit]

^^^ And on the issue of management (linked to outsourcing, hehehe):

http://www.chron.com/disp/story.mpl/headli...iz/4939623.html (http://www.chron.com/disp/story.mpl/headline/biz/4939623.html)


Those companies with a minor stake, particularly BP and Chevron, can continue to provide some technical expertise. But the real knowledge no longer lies with the oil companies anyway, it&#39;s at the service companies. The majors outsourced much of their R&D to the oil service companies in the late 80s and 90s as cost cutting measures. Unless Chavez does something crazy to the service companies, he&#39;ll have all the experts he can pay for.

July 6 update:

http://www.ft.com/cms/s/69e84aaa-2b87-11dc...0b5df10621.html (http://www.ft.com/cms/s/69e84aaa-2b87-11dc-b498-000b5df10621,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html)


According to reports, Venezuela’s current production stands at 2.4 million bpd, with about a 150,000 bpd shut-in resulting from agreements within OPEC. Although politically palatable for the Chavez government, the Russian and Iranian oil companies currently being invited to exploit Orinoco heavy crude concessions do not have the capacity to increase Venezuelan production or have the ability to exploit heavy oil, an energy analyst confirmed. The analyst said that PDVSA would likely look to contract out to more sophisticated private oil services companies.

Here&#39;s the interesting part: the most notorious oil service company happens to be Haliburton. ;)

[Capitalist Lawyer]

If "supply and demand" is a myth as you communists claim and that the oil companies can charge whatever they want for oil while purposely manipulating supply (only for the sake of profit), then why isn&#39;t gasoline &#036;10.00 a gallon and oil &#036;700 a barrel?

People need oil correct? And would be willing to pay "any price for it" correct? And the oil companies are greedy and hell bent on monopoly? Why not raise the price regardless of supply or demand?

[Dr Mindbender]

They will have to &#39;pay any price&#39; when it starts to run out. :lol:

[ZX3]

Originally posted by Ulster [email protected] 04, 2007 08:03 pm
They will have to &#39;pay any price&#39; when it starts to run out. :lol:
Then the cost of oil will not be worth its benefit. Other forms of energy will take over.

[Die Neue Zeit]

Originally posted by Capitalist [email protected] 04, 2007 05:59 pm
If "supply and demand" is a myth as you communists claim and that the oil companies can charge whatever they want for oil while purposely manipulating supply (only for the sake of profit), then why isn&#39;t gasoline &#036;10.00 a gallon and oil &#036;700 a barrel?

Care to explain why certain Western cities closer to oil fields and refineries pay MORE for gas at the pumps than bigger, Eastern cities that are further away from the pumps? :rolleyes:

And have you ever heard of the microeconomic concept called "elasticity"? <_<

[Capitalist Lawyer]

None of you answered my questions.

Why isn&#39;t gas &#036;10 a gallon? If not because of "Supply and demand"?

Here&#39;s another example of "supply and demand".

Employers cannot pay whatever they want, or they&#39;d pay less than a dollar per day. Employers, (like consumers and everyone else that participates in the economy) are subject to supply and demand, and therefore must pay what the market demands.

When workers get paid a low wage, it&#39;s not because the capitalist is "evil" or "greedy" but rather responding to basic market mechanisms.

If you guys want higher wages for workers, then tell congress to restrict immigration and to repeal minimum wage laws.

[RNK]

And the wheels on the bus go round and round... again... for the 23590835690th time.

Employers CAN and DO pay whatever they want in some parts of the world; we are gracious enough that our particular geographical area has a rich history of working-class struggle by men and women like us, and probably not like you, who fought and in some cases died in order to force their employers to fork over more of the profit that they slaved to create.

And by all means, oil companies could sell gas at &#036;10 a gallon. Unfortunately, 90% of the population wouldn&#39;t be able to afford it, and their profits would burn like their mansion estates should. Obviously they&#39;re not going to slit their own wrists by being stupidly greedy; just enough to constantly pressure the limits of what is economically and, more importantly, socially maintainable. And that is the secret to capitalism&#39;s endurance; give just enough to maintain the order of things, without mass rebellion.

You&#39;re not very smart for a Lawyer. Hence the Capitalist part, I assume.

[CrazyMode]

Originally posted by Capitalist [email protected] 05, 2007 12:59 am
If "supply and demand" is a myth as you communists claim and that the oil companies can charge whatever they want for oil while purposely manipulating supply (only for the sake of profit), then why isn&#39;t gasoline &#036;10.00 a gallon and oil &#036;700 a barrel?

People need oil correct? And would be willing to pay "any price for it" correct? And the oil companies are greedy and hell bent on monopoly? Why not raise the price regardless of supply or demand?
You clearly don&#39;t even understand the basics of supply and demand. Have you heard of elasticity? How about oligopoly? Because of the belief/fact that gasoline is considered a need in the west, the quantity changes little even with a significant change in price. I&#39;m sorry, am I going too fast, did you not know supply and demand measures quantity and price?

The point is, certain resources allow, in fact they basically demand, that people manipulate and control them for profit. Another example is property, housing, and rents. These are also very inelastic people are often gouged in this area too. It isn&#39;t necessary or natural to do this.

In other industries, firms wish to control prices. That is the supposed advantage of capitalism, to maximize growth by reducing prices and costs. In industries with inelastic goods and services, firms will do little to encourage price control, and in the case of OPEC, they are encouraging price instability by limiting production.

I believe supply and demand exists, and I believe it is proof that private enterprise will abuse resources and look for profits instead of the general needs of society.

[Die Neue Zeit]

^^^ I pointed out elasticity above. Unfortunately, he thinks that all economic forces are market forces.