Chavez, oil companies on collision course

With President Hugo Chavez setting a May 1 deadline for an ambitious plan to wrest control of several major oil projects from American and European companies, a showdown is looming here over access to some of the most coveted energy resources outside the Middle East.

Moving beyond empty threats to cut off all oil exports to the U.S., officials have recently stepped up pressure on the oil companies operating here, warning that they might sell American refineries meant to process Venezuelan crude oil.
“Chavez is playing a game of chicken with the largest oil companies in the world,” said Pietro Pitts, an oil analyst who publishes LatinPetroleum, an industry magazine based here. “And for the moment he is winning.”

But this confrontation could easily end up with everyone losing.

The biggest energy companies could be squeezed out of the most promising oil patch in the Western Hemisphere. But Venezuela risks undermining the engine behind Chavez’s socialist-inspired revolution by hampering its ability to transform the nation’s newly valuable heavy oil into riches for years to come.

As Chavez asserts much greater control over Venezuela’s oil industry, his national oil company, Petroleos de Venezuela, is showing signs of stress. Management has become increasingly politicized, and money for maintenance and development is being diverted to pay for a surge in public spending.

Houston Chronicle