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Venezuela's oil production and other tales

By Aleksander Boyd

London 05.06.06 | During my last trip to Washington DC I attended a conference on energy organized by The Heritage Foundation. Karen Harbert, Gustavo Coronel, R. Kirk Sherr and Carl Meacham discussed Venezuela's threats to cut energy supplies. Before that I had attended another conference in New York's Columbia University where another panel formed by Seth Antilles and Michael Skol, former US Ambassador to Venezuela, touched upon the same issue. All panelists seemed in agreement that Chavez's threats are nothing but hot air for he needs the revenue that oil sales to the USA provides much more than the US needs his oil. As a matter of fact the US coped, remarkably well indeed, with a sudden cut in oil supply from Venezuela during the strike of 2002-2003.

American perceptions are shared by Europeans. During and after the walk for democracy we met with Michael Lingenthal, Rafael Gelabert, Nicolas Pascual De La Parte and Luis Yañez Barnuevo. To them energy matters are also cause for concern and certainly a more stable and trustworthy government in Venezuela would have a significantly positive impact in world's energy markets.

Some of the arguments that Chavez used to gain control of PDVSA were that the company had turned into a "black box... an unaccountable state within the state..." Unfortunately Chavez's take over has not translated into more transparency or indeed more income for Venezuelans. To the contrary no one knows for certain how much is PDVSA producing today. In the conference in Washington DC I heard one Fadi Kabboul, Minister Counselor for Energy Affairs in Venezuela's Embassy in that city, assuring a Reuters correspondant that according to independent audits PDVSA was producing 3.3 MBD. Taking my eavesdropping further I approached him and asked whether he was in a position to back that claim with verifiable evidence. He replied confidently, gave me his business card and promised to send any relevant information via email, which, of course, he never did.

Many people around the world believe that Chavez's reign will last as long as oil prices remain high. That's, in my view, an extremely ignorant position. It is not falling oil prices which will determine the permanence in power of Castro's lapdog but rather falling oil production, something which Chavez has no means to stop. That is why he keeps rattling markets with spurious charges and hollow threats; that is why his ministers said prior to the referendum that an opposition victory would mean instant disruption in output; that is why they lobby OPEC and non-OPEC countries to cut production to keep prices inflated; that's why he has said that he would blow Venezuela's oilfields a la Saddam; and that is also the reason of his alliance with the Iranian fundamentalists, who are quick learners in the art of distabilising Western energy markets.

But as oil is a fungible commodity PDVSA's loss of output, and Nigerian problems, have short-lived effects in the market. And as I keep stressing everywhere I go with us in power in Venezuela, meaning people who cherish private property, rule of law, capitalism, stability, peace and freedom the world would be a much better place. The left had its chance; as a matter of fact different leftist tendencies diverging in degrees of populism and clientelism, have (mis)governed Venezuela since 1958.

The time to do the Right thing is upon us; indeed the right thing to do is to disregard the nonsense coming out of Cubazuela.

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