The Truth about Halliburton in Venezuela

Franco Vielma, a Venezuelan radio talk show host and development worker with a public company, responds to the accusation that the Venezuelan government has signed a “pact” with Halliburton and that the U.S. oil company is now “coming” to operate in the country. He explains that Halliburton has operated in Venezuela for many decades, and agreements in recent years have actually reduced the scope of company’s operations in Venezuela’s oil industry.


Franco Vielma, a Venezuelan radio talk show host and development worker with a public company, responds to the accusation that the Venezuelan government has signed a “pact” with Halliburton and that the U.S. oil company is now “coming” to operate in the country. He explains that Halliburton has operated in Venezuela for many decades, and agreements in recent years have actually reduced the scope of company’s operations in Venezuela’s oil industry.

As a first clarification: my opinion is that any economic agreement with Halliburton is questionable and should not pass by a conscious collective unnoticed; one that recognises in Halliburton a company that is murderous against the peoples of Iraq and the world.

How Halliburton operates in Venezuela

In order to talk about Halliburton in Venezuela, let’s begin with other important clarifications: Halliburton isn’t “beginning” operations in Venezuela. Nicolas Maduro isn’t “bringing” Halliburton to Venezuela. Halliburton isn’t “coming” to Venezuela as part of a sinister pact between Maduro and the gringos. It’s not the first time that PDVSA [Venezuela’s state oil company] signs an agreement with Halliburton. This company has been in our country for decades. Its headquarters for decades has been located in Cabimas, Zulia state.

Halliburton has been operating in Venezuela since the times of the Fourth Republic [1958 – 1998] and its moment of “splendor” was the era of the “operation agreements” in which the old PDVSA totally privatised and transnationalised its operating processes. Those that think “How could Maduro and the government bring this company in and make agreements with it?” reveal enormous ignorance about what has been happening in our country since long ago and what this has to do with our oil. But it’s difficult to blame someone for this, understanding that we Venezuelans have a century depending on oil and it’s what we know least about.

Other details to know: Halliburton as an international operator is a company that has been offering services to PDVSA both directly and indirectly, as much in the old PDVSA and the new one. Since 2007 the transnational companies that used to control the Orinoco Belt [a large inland oil reserve in Venezuela] went from the system of “operating agreements” to subordinate themselves below the operative and financial hegemony of PDVSA via the system of “mixed companies”.

This meant that, in nationalising the oil fields, installations and equipment, the transnational companies had to associate themselves with PDVSA to continue participating in the business. If not, they could withdraw themselves, receiving an indemnity calculated in Venezuela and litigated in Venezuela. That was how Exxon Mobil and Conoco Philips decided to not accept the new mechanism and a traumatic legal process began which has served the international attack against PDVSA and Venezuela.

One of the companies that decided to stay under this mechanism and is currently in association with PDVSA, in the form of two “mixed companies” called Petro.Piar in the Orinoco Belt and PetroBoscan”on the east coast of the Maracaibo lake, is Chevron. Upon Chevron and Texaco fusing, the consortium that has entered these associations is known as Chevron – Texaco.

The Bush family is among Chevron – Texaco’s main shareholders. At the same time they are historic partners of Halliburton, property of Dick Cheney, who was the right hand of Bush senior and Bush junior in their war-making adventures in the Middle East, particularly in Iraq. The relationship between these characters isn’t just based in their war deals or political alliances. They have solid business between their companies, as Halliburton has historically been a fundamental operator of Chevron and Texaco, since before their fusion.

Halliburton was the main contractor of the so called “re-construction” of Iraq, making deals with enormous profits. Halliburton is also currently the main operating contractor in the oilfields of Iraq, of which many are controlled by Chevron Texaco.

The mixed companies, created since 2007, are associations between PDVSA and a transnational company, under conditions of superiority and hegemony in the association in favour of PDVSA. The majority of mixed companies in the Orinoco Belt, for example, have an average of 60 – 65% of shares in the hands of PDVSA and 40 – 35% in the hands of the international counterpart. As such, PDVSA guarantees the control of operations and strategic orientation of the business. Chevron, and by extension Halliburton, were covered by these mechanisms because they decided to stay beneath our conditions.

Chevron was a beneficiary of a set of “conditions of trust” that facilitated PDVSA to consolidate the mixed companies in 2007. In fact, these conditions continue in the present and are the same as those offered to Chinese, Russian, Argentine, or Brazilian companies. One of these conditions is that the international partner in the mixed company, although it doesn’t have total autonomy in the operative management of the assigned oilfields, can propose contracts with operators below preferential conditions, with whom PDVSA, as the head organisation that controls all operative processes, should countersign and make said agreements. That is to say, if we are associated with Chevron, we will be associated with Halliburton by Chevron’s association, as Halliburton operates in the oilfields assigned to the mixed companies PetroPiar and PetroBoscan.

To illustrate it another way: if it’s necessary to increase the production of barrels of oil in the Belt, it is necessary to make agreements with PetroPiar. If financing is necessary, Chevron will make its contribution, and if it’s necessary to undertake operations, Halliburton will participate as a contractor. PDVSA has to make these agreements with Halliburton, as it [PDVSA] is the company that has the hegemony of the Belt and has shares in PetroPiar, and it’s the one that assumes the responsibility of carrying out these agreements.

If we check the Plan of the Nation [the national development plan drafted by Hugo Chavez in 2012], the aim for the increase in extraction of barrels per day (bpd) is from 3 million bpd in 2012 to 6 million bpd in 2019. This implies accelerating all the processes of joint action with PDVSA and all its partners, especially in the Belt. It is due to this that PDVSA makes these agreements with these companies.

Currently all of the mixed companies have the obligation of re-launching operative schedules, estimating necessary financing and accelerating production. $US 140 billion is needed to put all of the Belt into operation, 7 thousand kilometers of pipes, two refineries, two deep water ports for supertankers, and thousands of drills and tillers for this end.

To make this investment sustainable, a sensible and immediate increase in current production is required, as in 2014, this goal is already lagging compared with what is set out in the “Sowing the Oil” plan, which is what governs production goals. Put another way, if PDVSA needs to meet the goal, if it’s necessary to pump more oil because the country needs more foreign currency, then it’s necessary to work with the operators that are already working and that already have operations in the oilfields of the Belt. That’s the explanation for the controversial PDVSA – Halliburton agreement.

That said, it’s necessary to make something known. This way of doing business in the framework of the new petroleum policy was thought of as a formula to restore the leading role of PDVSA and the state in the systems of production in oil deposits, without this undermining foreign investment and creating the conditions for the transnationals themselves to destroy our vulnerable system of oil production: as it also must be said, after 2002, in 2007, and in the present, vestiges of technological and operative dependence on these operators has been and is still palpable.

Our oil company has been the victim of a partial technological blockade and the scant transfer of technology by these companies. To dispense with these companies immediately means that our very vulnerable capacity to produce would also be affected, especially in the Belt, the extra-heavy oil found there and on which our national development and finances depend. The logical thing in this case, seeing it from a sovereign point of view, would be to break the link of technological dependence. There has been great advancement on this matter, but not at the speed hoped for.

As a personal reflection I should say that these agreements were thought up and signed in a time in which the world saw the destruction of Iraq. It’s painful to say it, but these agreements are part of the Chavez era, not the Maduro era. Lamentably it was Chavez, not Maduro, who signed this formula. It’s bad taste to talk of Chavez in this way, but it was Chavez who signed these agreements, with Chavez himself recognising that there existed objective conditions that implicated such a lamentable decision.

The context of the moment must be understood: Chavez made these agreements with the one and simple reason that they had to be made. No one in this country who knows the oil industry can say that it’s a good idea to cut off the international investment and technological support of the transnationals. Whoever says so doesn’t have the remotest idea of what they’re talking about, and it’s for a reason, not for imbecile caprice of Chavez or Maduro, that today PDVSA is associated with China, Brazil, Russia, Belarus, Argentina, India, Iran, Japan, among others, in our Belt, receiving their investments and technology.  

If we review in history what could be considered incongruities, we find a bit of everything. Apart from the exceptions of the case, in Cuba, to overcome the blockade, Fidel Castro had to negotiate with Peugeot of France, a criminal company vs. labour rights in the world, so that Cuba could have modern cars. It also had to do the same with Fiat, a criminal company and financier of the Italian massacre in Libya in 2011. Cuba has even made agreements with enslaving companies like Adidas, which has sponsored the Cuban Olympic delegation. These agreements have emerged from pragmatism and what could be considered incongruities, but it would need to be checked up to what point this is bowing down or not. I leave that to the consideration of each person.

My opinion with respect to Halliburton is that we should definitely work with urgency to overcome the ties of dependency that have been maintained with this company and Chevron – Texaco. This should be done for reasons of strategic security and ethics. What I believe should be done is to assume Chevron and Halliburton as dispensable, due to ethics and the common sense of being Venezuelans living in a besieged country with the largest oil reserves in the world at our feet.

It also must be said that today Halliburton in Venezuela is not what it once was. In fact, it’s one of the operators with the least reach and its role as an actor doesn’t compare with that of other operators that work with other consortiums. If we check the operations of PetroSinovesa (China – PDVSA), PetroCedeño (France – PDVSA), and PetroBieloVenezolana (Belarus – PDVSA), we will find that their operations are of greater volume and the role of their operators is much greater in importance in the Belt. This [reality] is far from certain commentaries that buzz around that “Maduro handed the Belt over to Halliburton”.

These are complex times. I can’t but underline the over-excited and one sided nature of the comments of many “comrades” (who knows up to what point) that strive, almost with pleasure, to attack Maduro, at the expense of the ignorance that there exists over these issues and at the expense of the immature attitudes in sectors of the left-wing in our country. Certain unconcealed expressions are being made known from within our classic, divisive, and fragmented left, and a great game they give to the right-wing by manipulating information and using the sacred act of criticism and opinion to demobilize and divide Chavismo from the inside. There are things to be said, things to criticise, issues in which is it necessary to express opinion, but there are very few cases in which this issue (of Halliburton) has been discussed with the correct information.

Let’s not fall for the games of manipulation, wherever they come from comrades. Chavez taught us to by studious and inform ourselves. He taught us that necessary and conscious criticisms must be made. Let’s not allow this sacred act, of expressing opinion, which we must exercise, to become an instrument of our own destruction. I call for revolutionary cohesion and a conscious reading of what’s going on in our country.

This article is an abbreviated version of the original. Translated by Ewan Robertson for Venezuelanalysis.com