Venezuela: the spectre of Big Oil

ExxonMobil isn’t suing PDVSA because it needs the money. The world’s largest publicly traded corporation recorded profits of $40.6-billion (U.S.) in 2007, up three per cent from 2006’s record of $39.6-billion. The truth is, ExxonMobil’s ultimatum has more to do with politics than economics. “Never again will they rob us – the ExxonMobil bandits. They are imperial, American bandits, white-collared thieves. They turn governments corrupt, they oust governments. They supported the invasion of Iraq.”[fn]Cited in Saul Hudson, “Chávez warns he’ll stop oil shipments to U.S.,” The Globe and Mail, Feb. 11, 2008, p. B.3[/fn] This was the response from Venezuelan president Hugo Chávez to the successful lawsuit by the world’s biggest corporation (ExxonMobil), freezing $12 billion in assets of Venezuela’s state-owned oil company, PDVSA – a serious escalation in Big Oil’s long running dispute with Chávez and the movement he represents.

ExxonMobil isn’t suing PDVSA because it needs the money. The world’s largest publicly traded corporation recorded profits of $40.6-billion (U.S.) in 2007, up three per cent from 2006’s record of $39.6-billion. “If Exxon were a country, its 2007 profit would exceed output of two-thirds of the world’s nations. Its 2007 revenue of $404-billion (U.S.) would place it among the 30 largest countries, ahead of such middle powers as Sweden and Venezuela.”[fn]Shawn McCarthy, “Exxon profit hits $40.6-billion,” The Globe and Mail, Feb. 2, 2008, p. B.7[/fn]

ExxonMobil claims it is suing PDVSA because of a June 2007 deadline given by Chávez to Exxon and other Big Oil corporations operating in Venezuela, demanding they cede majority control in their heavy-crude upgrading projects in the country. ExxonMobil and ConocoPhillips filed arbitration requests with the International Center for Settlement of Investment Disputes, and ExxonMobil simultaneously took legal action in courts in the U.S. and Britain, which on February 7 agreed with their claim, and ordered the freeze of PDVSA assets.[fn]Peter Wilson, “Big Oil’s Victory in Venezuela,” BusinessWeek, Feb. 7, 2008, www.businessweek.com [/fn]

But there is much more at stake than a simple legal disagreement. First – many other Big Oil companies have agreed to Chávez’ terms and not gone to court – among them, Chevron Corp., Norway’s Statoil ASA, Britain’s BP PLC and France’s Total SA.[fn]Brian Ellsworth, “Exxon, ConocoPhillips won’t bow to Chávez,” The Globe and Mail, June 26, 2007, p. B.12[/fn] Second, Venezuela is not the only country to confront Big Oil and demand that old contracts be renegotiated. Here in Canada, Newfoundland’s Danny Williams demanded and won an ownership share in the multi-billion-dollar Hebron offshore oil deal.[fn]Colin Campbell, “How to win, in a fight with Big Oil,” Maclean’s, September 10, 2007, p. 62[/fn] Even the Tories in Alberta are forcing Big Oil to pay higher royalties.[fn]Guy Chazan, “Oil Sands Are Shifting in Alberta,” Wall Street Journal, February 5, 2008, p. A8[/fn] And in Russia, “both BP PLC and Royal Dutch Shell PLC have ceded control in big, lucrative Siberian projects to Russian gas monopoly OAO Gazprom.”[fn]Russell Gold, “Big Oil looks for Plan B after Venezuela,” The Globe and Mail, June 27, 2007, p. B.13[/fn]

The truth is, ExxonMobil’s ultimatum has more to do with politics than economics. Russia’s ruler Vladimir Putin holds office because of his ties to the secret service, his crackdown on public debate, and his commitment to pushing Russia back into the world of Big Power politics. That world of corruption and repression is comforting and familiar to the owners of ExxonMobil. Chávez, by contrast, holds office because millions have again and again been willing to put their bodies on the line against multinational corporations and their local allies. That revolutionary movement is terrifying to ExxonMobil.

So – working with courts in the U.S. and Britain (the two biggest western imperialist powers) – ExxonMobil is testing the water, seeing just how strong the revolutionary movement in Venezuela is. This is especially critical, given the setback faced by Chávez in the recent constitutional referendum.

And we shouldn’t doubt the capacity of multinational corporations to use a legal fig leaf to pursue their “right” to pull exorbitant profits out of the Global South. “BP won an arbitration case against Libya in the 1970s … and chased tankers of Libyan crude around the world to seize them as payment.” In 2006 and 2007, “Western companies that purchased debt for unpaid construction work in the Congo have tried to seize tankers of Congolese oil to satisfy arbitration awards.”[fn]Russell Gold, “Big Oil,” p. B.13[/fn]

The ExxonMobil attacks have been met with defiance in Venezuela. PDVSA denies that any significant assets have been affected by the court action. “PDVSA is operating at 100 percent and is exporting oil all over the world,” said Venezuelan Energy Minister Rafael Ramirez.[fn]”Venezuela denies PDVSA asset freeze,” www.chinaview.cn, February 9, 2008 [/fn] February 11, Chávez said that if ExxonMobil does succeed in freezing PDVSA assets, he would halt oil exports to the United States.[fn]Simon Romero, “Chávez threatens to end oil exports to U.S.,” International Herald Tribune, February 11, 2008, www.iht.com [/fn] This is a threat the U.S. has to take seriously. As well as being the fourth largest exporter of oil to the U.S., if Venezuela succeeds in certifying an additional 200 billion barrels of oil reserves to the 100 billion already certified, it will officially have the most proved reserves of oil, in the world.[fn]Steven Bodzin, “Exxon Gives Chávez Biggest Fight Over Nationalization,” Bloomberg.com, February 13, 2008[/fn]

With so much at stake, U.S. imperialism and its corporate allies are not at the moment in a position to launch a sequel to the failed coup of 2002. Venezuela’s movement is too big, and Venezuela’s oil is too important for that to happen – for now. But we know from the bitter history of Big Oil and the Global South that this is not the last confrontation between corporate and popular power in Venezuela.

© 2008 Paul Kellogg