Chavez weighs sale of US oil plants

Compiled by Eamon Martin

Feb. 8 (AGR) -- Venezuelan President Hugo Chávez said his government may sell eight US refineries as part of a strategy by the world’s fifth-largest supplier of oil to reduce dependency on sales to the United States.

“Not one Venezuelan works at these refineries,” Chávez said in Buenos Aires on Feb. 1, according to Venezuela’s Communication and Information Ministry. “They don’t give us one cent of profit. They don’t pay taxes in Venezuela. This is economic imperialism.”

Chávez, who on Jan. 30 signed agreements with China to boost sales of gas and oil, also said he may sell refineries in Germany, Sweden and the United Kingdom, according to the ministry’s website.

Venezuela’s intention to divert its oil exports away from the US market was underscored the following day after Chávez said he planned to sell Citgo, a Venezuelan-owned refining and distribution network in the US.

While in Argentina Chávez said that his government wanted to sell eight refining assets owned by Citgo, the US subsidiary of Petroleos de Venezuela (PDVSA), the country’s state-owned oil company.

Citgo accounts for 15 percent of US oil refining capacity, and its eventual sale could complicate the supply of some products in the US because Citgo refineries are configured to process Venezuela’s heavy quality crude.

Together with a partly owned refinery in the US Virgin Islands that gives PDVSA refining capacity of 800,000 barrels per day in the US, the company also licenses about 14,000 Citgo-branded petrol stations, 90 percent of which are in the US and 10 percent in Puerto Rico.

Chávez said Citgo should be sold because it was denying PDVSA adequate revenue and because it was, in effect, contributing tax to the government of President George W. Bush, rather than to Venezuela.

“We are subsidizing Mr. Bush,” Chávez said. A few days previously, Venezuela’s president had accused the United States of “robbing” his country of tax revenue.

The decision to sell Citgo appears to coincide with Chávez’s strategy to diversify the markets for Venezuela’s oil and products away from the US and towards countries such as China.

The recently signed agreements between Venezuela and energy-hungry China offer the Asian country almost unlimited access to the South American country’s massive oil and gas reserves. The offer increases oil exports to China and gives it preferential terms and conditions to operate oil fields in Venezuela and to invest in new Venezuelan refineries.

Chávez’s decision to divest PDVSA’s refining assets in the US is sure to fuel gathering concerns over the reliability of Venezuela as an oil supplier to the US.

In the past several weeks, PDVSA vowed to review 33 contracts with ChevronTexaco Corp., ConocoPhillips and other oil field operators in Venezuela and rejected a business plan by Houston-based Harvest Natural Resources to drill.

“We have serious concerns,” White House spokesman Scott McClellan said Feb. 1 at a press briefing when asked about Chávez’s plan to reduce oil business with the United States. “We have made our concerns known when it comes to President Chávez.”

Chavez is a proponent of expanding the state's role in several sectors of the Venezuelan economy. On Feb. 8, the newspaper El Nacional reported that Venezuela is set to review all foreign investments regarding the country’s mining industry. Chavez ordered the examinations to verify that they benefit his nation to their full capacity.

Chavez was the featured speaker last week at the World Social Forum in Brazil. The Venezuelan president dressed for the occasion, wearing a red T-shirt shirt emblazoned with the familiar image of the iconic Argentine revolutionary Ché Guevara.

“The imperialist forces are starting to strike against the people of Latin America and the world," thundered Chavez. "And it's up to our soldiers to defend the people and not submit themselves to the interests of the empire."

Sources: Axis of Logic, Financial Times (UK), Miami Herald, Oil & Gas Journal, United Press International