HOUSTON, CARACAS – US oil giant ConocoPhillips “seized” Venezuela’s export infrastructure in the Dutch Caribbean for compensation. Canadian gold company meanwhile resorts to Venezuela’s refineries in the US.
As the third largest US oil company ConocoPhillips (COP) said on Monday, the Venezuelan government has agreed to pay billions of dollars in compensation. This is preceded by a yearlong lawsuit. The amount of $ 2.04 billion will now be paid over a four-year period, with $ 500 million payable immediately.
COP had already begun in May with the seizure of foreign assets of the troubled state oil company Venezuela (PDVSA) to extort the compensation. Following the confiscation of the PDVSA loading terminal on the Caribbean island of Bonaire and a similar site on St. Eustatius, on 11 May a court on Curaçao had also given the go-ahead for US control of the large PDVSA refinery “Isla”.
Pirates of the Caribbean
The Bonaire, St. Eustatius and Curaçao facilities handle around a third of Venezuelan oil exports – more than $ 20 million a day. Money urgently needed in a country in a major debt and foreign exchange crisis, with millions suffering from food and drug shortages. Real wages have fallen by more than 75% in the last three years.
The loss of control over the export infrastructure in the Dutch Caribbean islands made the use of the largest tanker class for the South American country impossible, and it formed queues in front of the refineries and loading terminals of the Venezuelan Caribbean coast.
The low level of exports due to a shattered production had apparently been further reduced by COP’s seizures, which further intensified the impact of US economic sanctions on the currency crisis. Venezuelan trading partners such as China subsequently had to cope with failing sea deliveries of the “black gold”, the state lacked revenues for imports and debt service.
The seizures in May and the government’s current approval of the payment plan followed a ruling by a New York based Arbitration Tribunal of the International Chamber of Commerce on April 25, which had ordered the Venezuelan state to pay the compensation. But instead of agreeing to a payment plan after the verdict, according to government officials, COP went straight to a hard debt collection procedure.
Profit losses due to oil reform
The economic damage claimed by the more than $ 100 billion oil giant in front of the US based Arbitration Tribunal: measures taken by the Venezuelan government in 2006 and 2007, such as tax increases and partial nationalization, which President Hugo Chávez did in his wake opposition to the US government and major oil companies had caused a hole of allegedly more than $ 20 billion in corporate profits.
Hugo Chávez’s petroleum reform had been the basis of government extra revenues, which enabled millions of Venezuelans to increase their real wages and access to extensive education and health campaigns, until the crisis on the world’s oil market and continued neo-colonial dependencies put an end to reform after Chávez’s death in 2013.
Mass movement enabled reform program
When the US government and local oligarchs, along with international oil companies, organized several coup attempts against Chávez’s government in 2002 and 2003, a mass popular movement with its mass resistance defended the president in office with strikes and demonstrations and facilitated the reform measures.
Forty-nine of the forty-one foreign capital companies in the Venezuelan oil sector agreed to Chavez’s new eligibility rules without recourse to arbitration tribunals, which in addition to tax increases, also extended them decades of service. Only ExxonMobil and COP, both large corporations from the US, challenged the reform in various international arbitration tribunals and demanded sums of compensation totaling more than $ 42 billion.
In financial corset
However, compared to this record amount, the relatively small fine of $ 2 billion hits Venezuela, the country with the largest oil deposits in the world and its troubled state-owned company, at an inopportune time. International creditors from the East and West, each wanting to squeeze more than $ 50 billion from their financial colony, have a firm grip on the economy. The Venezuelan government of President Maduro recently paid interest rates of over 45% per annum to US investment bank Goldman Sachs in a heavily controversial dollar bond business. And for the bilateral treaties that Chávez and Maduro have concluded at government level with Russia and China, more and more of the rapidly declining Venezuelan oil production is needed. The available foreign exchange reserves is currently at a minimum and the large majority of the population is suffering due to the decline in food imports and a rapid increase in prices. The price of COP shares on Wall Street, meanwhile, rose more than 1% on Monday after the announcement of the arrangement last week.