April 26, 2007


Sad Day Ahead In Caracas (YOUSSEF IBRAHIM, April 26, 2007, NY Sun)

On or around May 1, President Chavez is expected to expropriate American and European oil ventures in Venezuela.

It will be a sad day for the Venezuelan economy. The same thing happened to Libya in the 1970s, when Muammar Gadhafi nationalized the oil industry, and Libya and the other OPEC member states that later undertook such an experiment have yet to recover.

While the oil companies survived, and even expanded, the Libyan oil industry suffered stilted growth and a huge drop in technological advances, restricting it to this day to a meager production level of about 1.4 million barrels a day. [...]

By and large, once Big Oil, be it American or European, is plundered, it is disinclined to come back for more. To be sure, new "service" contracts have been signed with Libya, Saudi Arabia, and OPEC to do some exploration work, lend a hand with the pumping. But without a share of the equity, these are cosmetic efforts. The heart isn't in it.

That is the lesson Mr. Chavez is about to learn.

Posted by Orrin Judd at April 26, 2007 12:17 PM
Comments for this post are closed.