US military sees oil nationalism spectre

US military sees oil nationalism spectre
By Andy Webb-Vidal in Caracas
Published: June 25 2006 22:03 Last updated: June 25 2006 22:03

Future supplies of oil from Latin America are at risk because of the spread of resource nationalism, a study by the US military that reflects growing concerns in the US administration over energy security has found.

An internal report prepared by the US military’s Southern Command and obtained by the Financial Times follows a recent US congressional investigation that warned of the US’s vulnerability to Venezuelan President Hugo Chávez’s repeated threats to “cut off” oil shipments to the US.

The Southern Command analysis cautions that the extension of state control over energy production in several countries is deterring investment essential to increase and sustain oil output in the long term.

“A re-emergence of state control in the energy sector will likely increase inefficiencies and, beyond an increase in short-term profits, will hamper efforts to increase long-term supplies and production,” the report said. So far this year, Venezuela has moved to double the level of taxes levied on oil production units operated by multinationals, Bolivia has nationalised its oil and gas fields, and Ecuador has seized several oilfields from Occidental Petroleum, the largest foreign oil company in the country.

The report also noted that oil production in Mexico, which faces elections next weekend, is stagnating be-cause of constitutional re-strictions on foreign investment.

Latin America accounts for 8.4 per cent of daily world oil output, according to the US Energy Information Administration, but energy supplies from the region make up 30 per cent of US energy imports, or about 4m barrels a day.


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