Chavez spending billions abroad to counter Bush Administration

RAW STORYPublished: Monday April 3, 2006

President Hugo Chavez is spending billions of dollars of his country's oil windfall on pet projects abroad that are aimed at setting up his leftist government as a political counterpoint in the region to the conservative Bush administration, the New York Times will run on page ones Tuesday. Excerpts:
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With Venezuela's oil revenue rising 32 percent last year, Chavez has been subsidizing everything from samba parades in Brazil to eye surgery for poor Mexicans, and even heating fuel for poor families from Maine to the Bronx to Philadelphia.

The spending has given more power to a leader who has been provocatively building a bulwark against what he has called American imperialistic aims in Latin America.

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Venezuela takes back oil fields

Venezuela has taken control of two oil fields operated by French firm Total and Italy's Eni.
The government said it had taken the step after failing to agree a deal with the two firms which would give it a majority stake in new ventures.

President Hugo Chavez has been working to strengthen state control over oil production in the country.

So far, 16 oil firms have agreed to change their operations into joint ventures with state oil firm PDVSA.

US based Chevron, Royal Dutch Shell and Spain's Repsol are among the companies that signed the agreement on Friday.

Eni believes that this action by PDVSA is a violation of Eni's contractual rights
Eni
Chavez rules out cheap oil

In an interview on state television, Minister Rafael Ramirez said the government took over the fields operated by Total and Eni on Saturday.

"We are waiting for a resolution with these operators after they exhausted the possibility of entering into the mixed companies," Mr Ramirez added.

Legal action?

Total's Jusepin field produces about 30,000 barrels of oil a day, while Eni's Dacion field produces almost 60,000 barrels per day (bpd).

Eni has vowed to fight the takeover which it declared illegal.

"Eni believes that this action by PDVSA is a violation of Eni's contractual rights," it said in a statement.

The company added it was considering possible legal action and would be seeking compensation.

Total confirmed its oil field had been taken over, but declined further comment.

Tighter controls

Last year, Mr Chavez declared 32 oil exploration deals in the country illegal - prompting the change to the contracts.

PDVSA officials had voiced fears that the previous agreements were disguised attempts to privatise the country's oil industry.

However, some oil firms have refused to sign new deals, arguing that they have pumped millions into operations in Venezuela, and now may not see any return on their investment.

Venezuela is currently the world's number five crude oil exporter.

The government has been tightening its grip on the oil sector to raise additional funds to fight poverty in the country.

As well as demanding firms give up majority control of their Venezuelan oil ventures, the government is also demanding firms pay more taxes.

Last month, BP was slapped with a back tax bill of $61.4m (£35m) covering 2001 to 2004.

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