APERTURA PETROLERA (1)
For much of the past twenty years, critics of U.S. foreign policy have noted that it is often countries with sizeable oil reserves that most often find themselves the targets of U.S.-backed “humanitarian” interventions aimed at “restoring democracy.” Analysis of the nearly two-decades-long U.S. effort aimed at regime change and “democracy promotion” in Venezuela has long linked such efforts to the fact that the South American country has the world’s largest proven oil reserves. However, the current U.S. effort to topple the government led by Chavista politician Nicolás Maduro has become notable for the openness of the “coup architects” in admitting that putting American corporations – Chevron and Halliburton chief among them – in charge of Venezuelan oil resources is the driving factor behind this aggressive policy.
Recently, Senator Marco Rubio – a key player in the Trump administration’s push for regime change in Caracas – tweeted: “Biggest [American] buyers of Venezuelan oil are Valero Energy & Chevron. Refining heavy crude from Venezuela supports great jobs in Gulf Coast. For the sake of these U.S. workers I hope they will begin working with administration of President [Juan] Guaidó & cut off illegitimate Maduro regime.”
In January (2019), the U.S. government recognized Juan Guaidó of the U.S.-funded and CIA-linked Popular Will Party as the “legitimate” president of the country.
A few hours after Rubio’s tweet, National Security Adviser John Bolton – who actively supported the U.S.-backed failed Venezuela coup in 2002 – appeared on Fox News and told host Trish Regan the following: “We’re looking at the oil assets. That’s the single most important income stream to the government of Venezuela. We’re looking at what to do to that.”
Though that was a stunning admission in and of itself, Bolton didn’t stop there. He continued: “We’re in conversation with major American companies now that are either in Venezuela, or in the case of Citgo here in the United States. I think we’re trying to get to the same end result here… It will make a big difference to the United States economically if we could have American oil companies really invest in and produce the oil capabilities in Venezuela.”
Bolton’s statements have garnered considerable attention in the alternative media community for their boldness, since leaked cables and documents have traditionally been the means through which the actual motivations of U.S. wars have been revealed. Largely overlooked, however, is the fact that Bolton stated that the Trump administration is working closely “with major American companies now that are either in Venezuela, or in the case of Citgo, here in the United States.” Given that Citgo is largely owned by Venezuela’s state oil company Petroleos de Venezuela SA (PDVSA), Bolton’s statement reveals that the corporations backing Washington’s regime-change push are those currently operating in Venezuela.
At present, there are only two American major oil and oil service companies with a significant presence in Venezuela – Chevron and Halliburton. However, Chevron is by far the leading American investor in Venezuelan oil projects, with Halliburton having written off much of its remaining business interests in the country just last year (2018) – losing hundreds of millions of dollars as a result.
These two companies have long been “historic partners” and have had a solid business relationship between them for decades. In addition, both have reaped the benefits of past U.S. interventions abroad – such as the Iraq War, where the U.S. government “opened” that country’s nationalized oil industry to American oil companies with military force.
Now with Venezuela’s nationalized oil industry in the crosshairs, Chevron and Halliburton are again set to benefit from Washington’s regime-change policies abroad. Furthermore, as Bolton’s recent statements suggest, these companies are also the top corporate sponsors of the current U.S.-backed coup to topple the government in Caracas.
Profitable but not Rockefeller-profitable
Chevron’s history in Venezuela is long and storied, as its presence in the country dates back more than a century. Over that time, Chevron’s presence in Venezuela has remained a constant despite the rule of drastically different governments, from military dictatorships to the socialist Chavista movement.
For much of its history in Venezuela, Chevron has had to deal with the Venezuelan government’s laws regarding oil production, particularly a 1943 law that held that foreign companies could not make greater profits from oil than they paid to the Venezuelan state. A few decades later in the 1960s, foreign corporations were made to manage their oil extraction projects in Venezuela by working closely with the Venezuelan Oil corporation, which later gave way to the current state oil company PDVSA, created in 1976. It was around this period that Halliburton first began work in Venezuela.
However, foreign corporations – particularly American ones – disliked having to settle for minority stakes in PDVSA projects and longed for the early days of Venezuela oil extraction when companies like Rockefeller-owned Standard Oil made wild profits off their Venezuelan oil assets.
After the “apertura petrolera” (or “oil opening” to foreign investment) in the early 1990s – and especially under the U.S.-backed government of Rafael Caldera, the president who immediately preceded Hugo Chávez – it seemed that the privatization of PDVSA was soon to become a reality and companies like Chevron, ExxonMobil and Halliburton enjoyed the “golden age” of American oil interests in Venezuela. However, Caldera’s fall from grace and the rise of Chavismo quickly shattered this decades-long dream of U.S. corporations and politicians. Not only did Chávez end any possibility of PDVSA’s privatization, he also weakened what remaining influence transnational oil companies had over the state oil company. For instance, he appointed independent oil experts to PDVSA’s board of directors, upending years of precedent where PDVSA managers with close ties to international companies had been responsible for controlling the board’s membership.
Chávez further restricted corporate ownership on some oil projects to 49 percent and fired PDVSA’s then-president, replacing him with a political ally. These drastic changes, among others, led to a strike among many long-time PDVSA workers, a strike that immediately preceded the failed U.S.-backed coup attempt in April 2002.
Following the coup, Chávez dismantled a joint venture originally established in 1996 between PDVSA and the Venezuelan subsidiary of the U.S.-based company SAIC, known as INTESA. INTESA, per the agreement, had controlled all of PDVSA’s company data (and its secrets), which it then fed to the U.S. government and U.S. oil corporations until Chávez destroyed it. This is hardly surprising given that the managers of SAIC at the time included two former U.S. secretaries of defense and two former CIA directors. Though obviously a smart move for Chávez, it weakened an advantage of U.S. corporations who had inside information on PDVSA while INTESA was operational.
The tensions between the Chavista government and the U.S. government along with U.S. corporations only grew from there before reaching a crescendo in 2007. That year, Chávez announced a decree that would nationalize the remaining oil extraction sites under foreign company control, giving PDVSA a minimum 60 percent stake in all of those ventures. U.S. oil companies ExxonMobil and ConocoPhillips left their Venezuelan operations behind as a result, losing billions in the process. The president of ExxonMobil at the time was Rex Tillerson – who would later become President Donald Trump’s first secretary of state.
Yet, during this time, Chevron, unique among American oil companies, saw an opportunity and spent the next several years cultivating close ties to the Chavista government and Chávez himself. Through the efforts of Chevron executive Ali Moshiri, Chevron blazed a new trail that would later serve as a model for foreign oil companies seeking to do business in Chavista-led Venezuela. Halliburton and another U.S.-based oil services company, Schlumberger, also decided to continue business in Venezuela.
During this time, the Venezuelan government through PDVSA and Chevron entered into several joint ventures, one of the most important of which became known as Petropiar, which blends Venezuela’s heavy crude oil with other substances to make it more easily transportable. However, Chevron – due to Chávez’s reforms of the oil sector – was forced to settle for minority stakes in all of these ventures.
Halliburton, which has historically been a main operator for Chevron-owned oil fields, again partnered with Chevron’s post-2007 ventures in Venezuela and operates the Petropiar and Petroboscan oil fields that both have minority Chevron ownership.
For years, Chevron’s bet on Chavismo paid off and the profits rolled in. Moshiri even appeared in public on several occasions with Chávez, who once even called the Chevron executive “a dear friend.” However, following Chávez’s death in 2013 and the beginning of the U.S-backed economic siege of Venezuela soon after – first through joint oil-price manipulation in cooperation with Saudi Arabia and then through sanctions – the profits of PDVSA, and thus Chevron, have fallen dramatically. During this time, Houston-based Schlumberger drastically scaled back its operations in Venezuela.
Since then, relations between the Maduro-led government and Chevron have deteriorated precipitously and now, with the current U.S. coup in motion, Chevron is poised to turn on the Chavista government with the hopes that profits will not only improve but exceed what they were during the heights of the Chevron-Chávez partnership.
Betting on regime change
As oil production has lagged and profits have continued to slide, tensions between Chevron and the Maduro government have grown dramatically since 2017, when the Maduro-led government began arresting employees of Petropiar – the joint venture between Chevron and PDVSA – during a controversial corruption probe. For Chevron, the issue exploded after the Venezuelan government last April arrested two Chevron employees working at Petropiar, who were detained for seven weeks for their alleged role in fraud. Those tensions – in combination with worries that Chevron’s Venezuela operations could become unprofitable in less than five years – resulted in a report published by the Wall Street Journal claiming that Chevron was considering leaving Venezuela entirely.
However, despite media speculation in the U.S., Chevron denied that it was planning to leave Venezuela anytime soon, with Clay Neff, Chevron’s president for Africa and Latin America, telling Bloomberg, “we’re committed to Venezuela and we plan to be there for many years to come,” and adding that reports that Chevron would soon leave the country were “not accurate.” “We’ve been in the country for almost 100 years, we know how to operate, we’re a very experienced operator and we’re committed to our partner PDVSA,” Neff declared.
Halliburton’s activities in Venezuela have also taken a hard hit in recent years, with the company losing over $1 billion in investments since 2017. In 2017, Halliburton was forced to write off $647 million in Venezuelan investments and then was forced to sell $312 million more last year – its last remaining investments. Halliburton’s chief financial officer, Christopher Weber, told the New York Times last year that “the collapse of the Venezuelan currency and the worsening political climate,” as well as U.S. sanctions, were responsible for the decision. Halliburton later said in a statement that it planned on “maintaining its presence in Venezuela and is carefully managing its go-forward exposure.”
Since both Halliburton and Chevron announced their plans to “weather the storm” despite growing tensions, it has become more and more evident that both companies have found the U.S. government’s promise of increased control over Venezuela’s oil sector through privatization much more appealing than facing the prospect of maneuvering around recently imposed U.S. sanctions on PDVSA – which have been in the works for months – as well as the prospect of dwindling profits stemming from the continued decline of the Venezuelan economy and the degradation of its oil-sector infrastructure.
This raises the possibility that Chevron and Halliburton had decided to ride out the Venezuelan economic crisis and growing tensions with Maduro because it was betting on an aggressive regime-change policy toward the country. Indeed, some analysts have stated that planning on the current iteration of regime-change policy in Venezuela only began this past November, around the same time that Chevron decided to stick it out despite falling profits.
The fact that Chevron’s operations in Venezuela are expected to collapse in less than five years, as a result of the country’s oil sector and larger economic woes, lends further support to the possibility that Chevron sought to back a Washington-based effort to dramatically alter the Venezuelan government.
In Halliburton’s case, the fact that the company has already lost over a billion dollars in its Venezuelan investments since 2017 offers a different motive, one that involves not only recouping those losses but also gaining increased contracts in a post-coup Venezuela. Halliburton executives surely remember the $39.5 billion in profits they made following the U.S. invasion of Iraq. It is worth pointing out that, in media reports, Halliburton has stated its commitment “to the market in Venezuela,” signaling that it is interested in retaining a role in the country’s oil sector regardless of who governs it.
It should then come as no surprise that recent U.S. government sanctions on Venezuela’s oil sectors included exemptions for both Halliburton and Chevron. Equally unsurprising is the fact that the U.S.-backed “president” of Venezuela – Juan Guaidó – has already signaled his plans to open up Venezuela’s state oil assets to foreign corporations if he succeeds in ousting Maduro.
According to oil rating agency S&P Global Platts, Guaidó has already made “plans to introduce a new national hydrocarbons law that establishes flexible fiscal and contractual terms for projects adapted to oil prices and the oil investment cycle.” This plan would also create a “new hydrocarbons agency” that will “offer bidding rounds for projects in natural gas and conventional, heavy and extra-heavy crude” to international oil corporations.
The clear message here is that the U.S.-backed “president” of Venezuela is already signaling to his Washington backers that he will quickly privatize Venezuela’s state oil company if he succeeds in taking power, a move that has long been a key component of the platform of Venezuela’s U.S.-funded opposition, of which Guaidó is part.
Bolton’s recent statements have made it clear that Chevron and Halliburton are set to be the main benefactors of this privatization effort, as both are heavily invested in Venezuela and Chevron the only U.S. oil company still active in the country. The historically close relationship of both companies to the U.S. government, and covert coordination with the U.S. government in undermining or overthrowing governments in the recent past, also hint at their likely role in the current U.S. “meddling” in Venezuela.
Read the second part of the article
February 22, 2019