Monday, December 19, 2005

The value of standing firm 

As has been discussed before the previous administration of PDVSA negotiated a serious a sweetheart deals with foriegn oil companies, known as Strategic Associations which allowed them to exploit Venezuelan oil fields at very advantageous terms. As a result of these deals Venezuela has been losing billions of dollars in potential revenue.

Finally the government put its foot down and told the almost 30 foriegn oil companies involved that they would have to renegotiate the terms of their contracts and accept a majority PDVSA ownership in these Strategic Associations. As is to be expected the vendepatrias of eastern Caracas got into a tizzy about this and how Chavez was being unnecessarily harsh on the foriegn companies. Further, they claimed, the companies would never agree to renogiate the terms.

As is to be expected, what actually happened is the exact opposite of what the opposition predicted. Every single company, save Exxon-Mobil, has now renegotiated their contracts and accepted the governments terms. Once again Chavez has proved the doubters and naysayers wrong. And the Venezuelan treasury will be richer for it.


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