What's Up With Hugo and PDVSA? *

* With a Note on Bolivia

Update [2006-5-27 19:2:44 by Dave]: Gulf News reports yesterday PDVSA expects 3.4m bpd output
"We should be closing the year with a production ... of 3.4 million barrels per day," Vierma told reporters. "The average production for this month has been almost 3.3 million barrels per day."

The US Department of Energy and Wall Street analysts say Venezuela's total oil production is only around 2.6 million bpd.

It's time to check in with Venezuela and some other events in South America as Hugo's Bolivarian Revolution goes forward. Apparently, he strives to be Fidel Castro only with oil and without the beard.

Bolivarian Republic of Venezuela

There's lot to report on--oil shenanigans in Venezuela, nationalization of the oil & gas industry in Bolivia, Hugo's deals with China and the escalating conflict between Hugo and the United States.

From Joe Duarte, reporting at Rigzone in A Sudden Plunge In Production? (May 2) we learn that
Is Venezuela's oil production rapidly waning? One source reports that the world's fifth largest oil producer is showing signs of a rapid decrease in production, one of the key tenets of the peak oil theory....

Venezuela is buying oil from Russia in order to avoid defaulting on deliveries to clients.... According to the Financial Times: "Venezuela, the world's fifth-largest oil exporter, has struck a $2bn deal to buy about 100,000 barrels a day of crude oil from Russia until the end of the year.

PDVSA is a center of financial and political intrigue, as it is the hub of Mr. Chavez' political ambitions. The Venezuelan government uses the proceeds from oil sales to finance Chavez' Bolivarian revolution, in essence the spread of the hybrid Socialism espoused by Chavez and Fidel Castro...

PDVSA has not filed papers with the SEC in at least two years...

The EIA OPEC short term energy outlook for OPEC lists production for April of 2006 as 2.5/mbpd, well under the OPEC "quota" of 3.223/mbpd. (I quote quota because in my view, these OPEC numbers are meaningless in today's world.) However, this current production number has been disputed as coming from the political opposition in Venezuela, so how much oil they are actually producing remains something of a mystery. The EIA has not updated Venezuela's oil country brief page since 2004. This may not be an accident or perhaps they just haven't gotten arouund to it.

Back in 2005, in Running On Empty, Duarte had asserted that

Stratfor.com estimates that since Chavez became president, starting in 1998, "PDVSA has lost about 1.5 million bpd of its net crude oil production."

The main reasons have been the replacement of capable engineers and workers who disagreed with Chavez's revolutionary views, with inexperienced, and in many cases incapable replacements, and the lack of attention to infrastructure maintenance and improvement.

The result of the bad management and neglect, has been the steady erosion and near incapacitation of a major oil-producing region of Venezuela, the Western portion of the country, where as many as 10,000 wells have been estimated to have been rendered mostly useless. Venezuela is nominally the world's fifth largest oil producer.

Does lack of an experienced workforce some familiar? In any case, it appears to be true that Venenzuela's production has never recovered from the strike.

Click to Enlarge (from EIA)

But these production questions are only part of the story. Lately, Hugo and PDVSA have "renegotiated" their contracts with the IOC's operating there.

Venezuela, the largest oil producer in South America, plans to force ChevronTexaco Corp., ConocoPhillips and other companies to convert contracts covering 32 fields into joint ventures with the state oil company so the country can earn more from petroleum sales.

Petroleos de Venezuela SA would hold a 51 percent stake in the ventures under the plan, Rafael Ramirez, the country's energy and oil minister, said at a press conference today in Caracas. The operating companies, mostly foreign owned, now hold oil- production contracts in which they're paid a per-barrel fee.

Lately, they've escalated the stakes to cover their heavy oil production from the Orinoco Basin, which currently stands at 600/kbpd. From Bloomberg Venezuela's Assembly Approves Higher Oil Royalties
An overhaul of domestic hydrocarbons law was unanimously approved, state oil company Petroleos de Venezuela SA said on its Web site. The bill increases royalties to 33.3 percent from 16.67 percent on all oil companies operating in the country, including the four heavy-oil joint ventures. The higher rate will raise about $1.3 billion annually.
Are these just the first steps toward total nationalization? Which brings us to Bolivia.

What's Up in Bolivia?

President Evo Morales has nationalized his country's oil & gas industry. As the Economist tells us in Now it's the people's gas
Evo Morales chose May 1st, his hundredth day in office as Bolivia's president, to lead troops into his country's biggest natural-gas field, operated by Brazil's state-owned oil company, Petrobras. Wearing an oilworker's hard hat, he read out a nine-point decree under which the Bolivian state proclaimed its control of the country's oil and gas industry. “The plunder has ended,” Mr Morales, a socialist of indigenous descent, declared....

Morales joins the Bolivarian Revolution

Bolivia's natural gas reserves are the 2nd largest in South America after Venezuela's. How much are we talking about here? See for yourself, from the EIA.

Bolivian natural gas reserves (EIA)
Not bad, something to fight over

You can find some more detail at Wikipedia's Bolivian Gas War. The Economist says in their dry, understated style, "Mr Chávez's strategy clashes with Brazil's". No kidding. In fact, Brazil is pissed off. But nationalizing your fossil fuels doesn't exactly encourage foreign investment, does it? Again, the Economist notes

Bolivia needs outside capital and technology to develop its gas industry. Without new investment, by the end of next year it might struggle to fulfil its gas export contracts with Brazil and Argentina, says Carlos Alberto López, a consultant in La Paz. A recent landslide at one gasfield briefly cut exports, a sign that output is close to capacity....
Hugo has jumped all over this deal, however. "Mr Chávez has offered to buy all of Bolivia's soya crop (its second-biggest export) in return for all the diesel the country imports". Welcome aboard. Viva la Revolution!

Back to Venezuela

Hugo has already made some deals with China (see Venezuela and China sign oil deal) and is trying to make arrangements to export directly to Asia, but he needs a pipeline, always a dicey proposition.
Since supertankers cannot pass through the Panama Canal, the journey to Asia is long and expensive. For now, Venezuela exports only about 300,000 barrels of oil per day to China.

In its effort to gain access to the Pacific, Venezuela has signed an agreement with Colombia to build a pipeline to the port of Tribuga on the Pacific coast. An additional proposal with Panama would modify a Panamanian oil pipeline to facilitate shipping oil to the Pacific coast.

Furthermore, Hugo has opined lately that trading in Euros rather than dollars sounds good to him--this comes as no surprise.

Finally, there is the usual escalating war of words between the US and Venezuela. America actually took a concrete step recently

Relations between Venezuela and the United States have grown tense in recent months. The Bush administration has accused Mr. Chavez of being a destabilizing force in Latin America. It announced earlier this month that the U.S. would stop selling arms to Caracas, saying it has failed to cooperate in the fight against terrorism.
The Bush Team have the usual concerns that Venezuela is moving away from democracy--which, ironically, is actually true in this case. Chavez, naturally, has dismissed such concerns and asserts that Bush is "bad for world peace" (yet another true statement) and feels, generally speaking, that Bush is a really bad guy. So, both sides are right!

In conclusion, here's some wanton speculation about the situation.

  • What will the US do? A sponsored coop attempt seems unlikely and outright military action is out of the question. The internal opposition is weak and Chavez is on the move.

  • Will Hugo nationalize the oil & gas industry? This also appears unlikely. He is wise enough to know that he needs outside investment and can not go it alone if he hopes to fund the Bolivarian Revolution, support other countries like Cuba and keep the people happy.

  • How about "heavy" oil development? Unlike the tar sands, I believe the longer these political difficulties go on, the more delayed any expansion of the Orinoco Basin production will be. So, I wouldn't expect much new development there anytime soon.
And that concludes our report on Hugo's Big Adventure.
Good post. A comment and a question:

I think Hugo will get a direct lesson in net energy over the next few years as Venezuela tries to liquify its heavy oil using energy intensive techniques. No one really knows the energy balance on that stuff but clearly one barrel of heavy equals something much less than one barrel of light sweet.

Who is the blonde?

OMG, it looks like Nancy Grace to me...

: )

I believe the "blond" is Hugo's second wife, the journalist Marisabel Rodríguez, from whom is divorced.

Marisabel Rodriguez de Chavez

Apparently, she couldn't stand the pressure after the failed 2002 coup d'etat.

Venezeulan chicks are hot.
Mama Smurf. You ain't kiddin' ! I knew Oil was the right business. Or as Stern would say - OOOooo Fa! Go, Hugo!
"It's good to be the King"
Ikivo SVG   
The most interesting development in all of this is the emergence of the "oil for X" barter economy that Venezuela is engaging in with it's neighbors. That's effectively taking oil off the world market and making it a strategic foreign policy tool. These are the means by which regional empires are founded.
The hysteria about falling production and the scaring away of foreign investment is getting boring fast.  It's the same propaganda emanating from the same propaganda outlets that gets spewed at Russia.  Well, boys and girls, your consumer interestes are not paramount.  Venezuela doesn't need to squeeze the last drop of oil for your pleasure just as Russia doesn't.

It is simply incredible how much bitching there is about the token gasoline price increase in Canada and the USA.  Consumers have been conditioned to expect ridiculously low prices that are cheaper than bottled water.  Considering that oil will not be available for any price when it is no longer viably accessible, it is about time prices started to increase seriously.  The pulling back of production in Venezuela and Russia is the proper course of action.  Demands for endless amounts of cheap oil are the true obscenity.

" Consumers have been conditioned to expect ridiculously low prices that are cheaper than bottled water."

That is part of the problem and part of the solution. We are conditioned to believe the future will be very like today, all of us, in any culture. In the US and Canada we are being 'baby-stepped' to death. Each day our societies momentum takes us a small step further in the wrong direction, yet the step is so small that people dont notice it. Its camoflaged with American Idol, Davinci Code and the media threads that ebb and flow through our lives.

Until 10 years have gone by and some people (many TOD readers) see the forest through the trees and the fire raging towards us. Just like fire-fighters stem the continuation of a large fire by actually building then putting out smaller fires ahead of its path, we need to shock the system by raising gas prices dramatically then pulling them back (and many other examples like this). If peoples 'new reality' sets in and is accepted though with griping, complaining and misery, then partially retracting such measures (Say, from $3 gas to $5.50 then back to $4) will make things seem not so bad. Madison Avenue learned long ago to shock people with a negative message, then follow it directly with a positive one.

Status quo is we are all retreating to the part of the forest that is near the cliff. We need to fight back and meet the fire halfway. As a trader, my psychologist friends told me to 'lean into my fear' rather than away from it. That was a valuable lesson. We can take back many of those baby steps in the wrong direction with a couple of big steps in the right direction.

* How do people put others previous quotes in those grey boxes?
** Sorry this post should have been on drumbeat but I was responding to dissidents comment

How do people put others previous quotes in those grey boxes?

<block quote> paste the quotation in </block quote> There should be no space in "blockquote"

like this?

<block quote> paste the quotation in </block quote> There should be no space in "blockquote"

AHHH. Thanks. Im learning...;)

Thank you, porsena. Very useful.
Good insight on the situation, thanks Dave.

I disagree with this setence though:

The Bush Team have the usual concerns that Venezuela is moving away from democracy--which, ironically, is actually true in this case.


I agree with your disagreement.  In fact, he has to face another election in December 2006.


Irony does exist; however, it does not exist as the poster implies.

The irony is that Resident Bush has never been elected and in fact was the beneficiary of a judicial and vote manipulation coup.

Chavez enjoyed a massive plurality, all vetted by Jimmy Carter's group, The Carter Center, while GW Bush's election failed to meet the simple guidelines suggested by President Carter's voting rights group.

Had Carter's group not been barred from monitoring our elections this last presidential election cycle, we may have seen the monkeyshines that passes for democracy in our country in our slide towards fascism.

Do not look where the man behind the curtain points; look at the man behind the curtain.

I am confused...Is the curtain backlit so we can see where he is pointing?

Do we follow President Carters guidlines or the US constitution?  Bush won the electoral college (the constitutional requirement) in 2000.


The Electoral college is antiquated and needs to be abolished but it is our current setup.

And in 2004 Bush won the popular and electoral.


Clarify the coup please because I don't remember a shot being fired.  Both Gore and Kerry conceded victory.  If they believed differently or had evidence otherwise why are they silent?  

There is a HUGE division in this nation between the red and blue states.  I believe this is because the candidates offered are so polarized and appealing to extremes.  We need a liberal republican Mcain or consevative democrat Clark or some new blood young and less corrupt (Obama?) to take the reigns.

Chavez is brilliantly charismatic and has massive appeal in Latin America.  I think he is unpredictable but the US should make him an ally not alienate him.  Because as Chavez goes Latin America will probably follow.  

A coup d'etat can happen without a shot being fired.

Prior to Fidel Batista completed his coup without a drop of blood being shed.


Common Knowledge That Bush Did Not Actually win in 2000.

If all the ballots in Florida had been counted, Gore would have won.

Bush was selected by the Supreme Court.

Let's keep the facts straight and not let the right wing media control the debate.

?A comprehensive review of the uncounted Florida ballots from last year's presidential election reveals that George W. Bush would have won even if the United States Supreme Court had allowed the statewide manual recount of the votes that the Florida Supreme Court had ordered to go forward."

New York Times  Nov. 12, 2001

http://www.nytimes.com/2001/11/12/politics/12VOTE.html?ex=1148702400&en=15da315fa8c0e917&ei= 5070

Wrong Wrong Wrong!

Only applies to the counties that Gore asked for a recount in.

You really need to do your homework and I will not do it for you.

This is an Oil website. Not a Left-wing, nutmonkey refugee-camp. Scram.
Let's See Who Is The Nut Monkey.

Honorably Discharged Naval Officer
 - Worked the Pentagon
 - The National Security Agency



Line Comercial Pilot

Be careful who you label because you don't like what they say.

How does any of this verify your sanity?  

"Be careful who you label because you don't like what they say."

You called me a troll.

Brcause You Act Like One.

Whenever someone posts information that does not fit your world view you attack them instead of honestly considering the data.

Seems your the one with the problem.

   You used 7 fallacies on this thread alone.  I have not "attacked" anyone, and I carefully consider everything I read.  I'm curious what you think my world view is.


I have used no fallacies. By your unwillingness to entertain the truth you attacked me using the method of passive agression.

I stand by the facts relayed in my posts.

  I already called you out on two obvious ad hominems and one appeal to popularity, I've read all your posts and this appears to be your style.  If you disagree with someone provide other information with a reference.  Shouting louder "I win" does not make it so.


I probably shouldn't jump into this debate, but...

The rigging of the 2000 presidential vote in Florida had nothing to do with the Supreme Court. It was even more insidious than that. It was planned months in advance, and was accomplished by erasing thousands of Democrats from the voter rolls. A whole book has been written about it. This link gives a pretty good summation on how it was done. Read it and weep:


Now back to Peak Oil...

The real point is that the Republicans "stole" BOTH elections with the full knowledge and complicity of the important Democrats.  It's not two different sides at all.  Pay attention to how things really work, not how they tell us they work.
Neither is credible on such an issue.  It is article of faith with those groups (and apparently you) that facts cannot dislodge.

I will take the word of that noted neo-conservative, pro-Bush propaganda rag, the New York Times instead.

[But the consortium, looking at a broader group of rejected ballots than those covered in the court decisions, 175,010 in all, found that Mr. Gore might have won if the courts had ordered a full statewide recount of all the rejected ballots. This also assumes that county canvassing boards would have reached the same conclusions about the disputed ballots that the consortium's independent observers did. The findings indicate that Mr. Gore might have eked out a victory if he had pursued in court a course like the one he publicly advocated when he called on the state to "count all the votes."]

I thought a statewide recount was mandated by FL law in the case where the margin of victory was very small.

Hi Entropy,

AlanfromBigEasy is the kind of Republican that will never admit facts.

He is a lost cause.

Ad Hominem
If It Quacks Like A Duck It Is Probably A Duck.

These types always refute the evidence with a passive agressive attack that dismisses the person becuase the evidence does not meet their prejudiced viewpoint.

In this case the evidence is clear.  It is also clear that the media spun the data to suit the situation.

What goes around comes around.

"If It Quacks Like A Duck It Is Probably A Duck."

   Are you the one quacking?"

"These types always refute the evidence with a passive agressive attack that dismisses the person becuase the evidence does not meet their prejudiced viewpoint."

   You respond to Ad hominem with Ad Hominem

"What goes around comes around."

I'm rubber you are glue....

But AlanfromBigEasy received such stellar service from the Bush administration, last August and ever since! ^_^
I thought a statewide recount was mandated by FL law in the case where the margin of victory was very small.

They did have an automatic recount, Gore wanted a second hand recount of some counties.

The statewide recount was effectively stopped by the SCOTUS decision.

I other words it never ocured because the SCOTUS ruled in Bush v Gore that Bush would be harmed by such a recount.

Which is true - he would not have been annoited Resident in Chief had the recount ocurred.

  Do you flip board games when you lose?

No I don't because I do not speak until after the eveidence is in.  With respect to the 2000 elcetion the eveidence is in and has been for many years.

You strike me as the type that would flip board games.

Are you a troll?

"Are you a troll?"

What? Is troll blogspeak for something else or do you mean supernatural troll/under the bridge downtown troll?


A coalition of newspapers, including the New York Times and Washington Post (both well noted neo-con rags) did a private recount, hence the dateline one year after the election for the NYT article.

From memory, there were three variables in how to count, giving 8 results.  Bush won with 7 of the 8 counts, some by 1,000+, Gore by less than 100 in one of the counts.  From vague memry, this required throwing out absentee ballots with smudged postmarks (thereby reducing military votes), and counting dimpled chads as votes.  Forgot the 3rd parameter.

Since I once dimpled a ballot, and then chose to NOT vote for either candidate (in Edwards vs. Duke for LA gov). I think that counting dimpled chads as votes is a farce.

One forgotten irregularity.  The national TV networks called the election for Gore whilst the polls were still open in conservative West Florida (Central Time Zone).  People left lines when they heard this.  At least a thousand votes lost.

If W. FL went 70% for Gore instead of Bush, there would have been no end of complaints, conspiracy, outrage.  But since it reduced Bush votes, it is forgotten.

Gore could not ask for a statewide recount - he could only ask for a recount in counties where he had a legal basis to do so.  The Florida Supreme Court eventually ruled for a statewide recount, but even this recount did not take into account the overvotes (one ballot with two marking for president).  That is the recount the us supreme court stopped in a partisan ruling.  Gore would have won if there was a statewide recount that included the overvote ballots where people both punched his name and wrote him in, just to be sure.

Before the 2004 election, the Miami Herald and the Tampa Tribune had articles regarding the process of purging felons from the state voter rolls.  Seems that many of the felons on the original list to be purged from voter rolls had hispanic (largely Cuban in Florida) surnames and black surnames, but only the blacks were being purged.  As you can probably guess, blacks tend to vote for Democrats and Cubans tend to vote for Republicans.  The lame reason given was that the Cuban surnames were so common that the state couldn't be sure that they were purging the right person.  No such concern for the black surnames.

Politics in this country is about money, power, and what you can get away with.

Appeal to popularity
I've just been reading Greg Palast on this issue in "The Best Democracy Money Can Buy". The election was stolen. Read the first chapter. As far as I can see his analysis is irrefutable becuase he's the only one to really investigate it. Forget his Peak Oil story in replies to this about his credibility. Read the book. It's all there.
"The Electoral college is antiquated and needs to be abolished but it is our current setup."

Yes it is our current setup, but it is far from clear that it should be abolished. The boys that drafted the U.S. Constitution placed considerable store in the decisions made by the states. At that, the winner take all at the state level process is something that states can elect to forego -- currently Maine and Nebraska use a different approach.

BTW, IMO, the electoral college makes a clear winner more likely and tends to diminish the value of any one given fraudulent vote.

Like I said...it doesn't even need a single shot.
I think it's fairly clear Hugo has been trying to acquire dictatorial powers. From the wikipedia article Hugo Chávez
Chávez has been severely criticized during his presidency. He has been accused of electoral fraud, severe human rights violations, assaulting democracy in favor of dictatorship, and political repression, and has survived both a brief 2002 coup and a failed 2004 recall referendum due to his enormous support amongst the poor that represent the vast majority of his constituents. Whether viewed as a liberator or authoritarian demagogue, Chávez remains one of the most complex, controversial, and high-profile figures in modern Latin American politics.
There are some references at the article like Venezuela: Curbs on Free Expression Tightened from Human Rights News.
Amendments to Venezuela's Criminal Code that entered into force last week may stifle press criticism of government authorities and restrict the public's ability to monitor government actions, Human Rights Watch said today.
Many opposition parties boycotted the last elections, thinking they were rigged. From the BBC Venezuela election boycott widens (Dec 2005).
Opposition parties are worried the election board could rig the vote....

Three other opposition parties pulled out of the poll earlier this week, accusing the electoral body of favouring pro-government candidates.

They are the main opposition party Democratic Action, Project Venezuela and the Social Christian party....

Read the entire news report for details. There are many other sources of information on this and other anti-democratic maneuvers by Chavez. Every time someone raises these issues, Hugo goes on a rant about how the US is behind everything. This is a classic politician's response--distract the public from the real issue and focus on an external scapegoat (even if, as this case, the criticism of America is well deserved). And let's face it Hugo is a megalomaniac.

Sorry for the long response, but I felt the need to defend my statement.

best, Dave


And let's face it Hugo is a megalomaniac.

This is the culmination of a post hoc ergo prompter hoc argument.

By quoting Wiki to say he is "accused" of seeking dictatorial powers, then deftly sidestepping the proudly confessed, demonstrable, and active role the private media took in the coup against him while saying he is accused of taking press freedoms, and then citing the accusations of some opposition parties that he has fixed elections without citing things like outside funding for the referendum he handily won, you are allowed to conclude with a variation of the initial premise that he's a strongman, a dictator, a wildman, an egomaniac, whatever.  (It should be noted that in the run up to the election these parties were polling badly.  Faced with certain defeat, might they choose to cast a shadow over the election by claiming corruption rather than fall in ignominious defeat?  But here I merely speculate.)

I am open to facts --  quotes from the Economist are not the same -- but rather facts that he has rigged elections, committed mass murder, taken away press freedoms, invaded other countries under false pretences.   Does he stand accused of torture, of disappearing his citizens?  

Is he a demagogue?  For speaking on the TV and radio weekly to the populace, thus bypassing the media the openly and proudly participated in the coup?  What makes him a demagogue.  Surely merely improving the lot of the poor doesn't count as demagoguing.  

In this post as elsewhere, the straw man is put up that "some on the left" support Chavez no matter what.  Maybe.  But I reach my conclusions based on hard evidence and this post has little other than agenda-driven innuendo and fact-impoverished accusations.

As for Evo Morales -- he campaigned on a promise to nationalize the natural resources, got elected, and kept his promise.   That might be a definition of democracy.  I'll have to check.

Thank you.  Chavez may be all of the bad things that are said about him, but all I hear are unsubstantiated accusations - and considering the source of a lot of them, I cannot imagine why anyone would pay attention to them for even a moment.
Unless we kill Chavez, THE TERRORISTS WILL HAVE WON.
The Tourists?  War on Terra?  Which team are we?  I thought we were sending the National  Guard down there to build a fence and keep the Venezuelans out so we can fight them over there and keep from fighting them over here.  Or something.  I get so confused.  I better go turn on Fox so I can remember what I'm supposed to think.
I like your post better.
Let's Assume you are correct.

That means it's OK for Bush to undermine our democrarcy but it's not OK for Chavez to undermine his.

I think your reasoning is just a little hypocritical.


When I assign research papers to my students, I inform them that should they use Wikipedia as a source, they will fail that paper. It is not considered reliable.

On the issue of American mainstream media, or the dreaded MSM as we here call it here, is controlled absolutely by corporations whose only interests are those of their stockholders. I can assure you that they have no intention of rendering an accurate picture of Chavez's government policies. The last thing that American corpomedia want is to let the American people know that there are countries where the elites do not call the shots. Venezuela has suffered from U.S. supported dictators for a long time. During that time, the people of Venezuela have suffered an almost non-existent educational system, no support for small business, an invisible healthcare system, run-down or non-existent infrastructure, right-wing death squads and a brutal right-wing suppression of dissent. Chavez has turned this around. He has organized teaching coops and increased literacy to record levels.

The amount of hysterical red-baiting we see in the media today regarding Chavez would make Joseph McCarthy proud. That most people in the US have neither inclination nor the intellectual skills to see through the transparent scaremongering of the right wing noise machine is testimony to the nearly total brainwashing of America's middle and lower classes.

The sad and sickening part is that the right wingers on this site will cheer on the fascists, laughing and heaping scorn even as the right wing government they adore strips the country of freedoms, fiscal responsibility and the moral high ground that America, at one time, could claim to some extent.

Yeah, the big bad socialists threaten our way of life. Who knows? We may have to suffer universal health care, a clean environment, a living wage, a culturally tolerant society, a fair society. Oh, what a travesty.

Hello Cherenkov,

Well said! We need alternative viewpoints like this so that the entire spectrum of discourse can be fully examined.

None-the-less, I still hope Chavez, and all world leaders, gradually abandon the infinite growth detritus-powered paradigm by mitigatively seeking to build biosolar sustainability with a new direction--in the final Overshoot analysis: Nature could care less about our politics.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

So easy. I love you. I really do. My sisters are better shots.
"nearly total brainwashing of America's middle and lower classes."

Why do you exclude the upper classes?  My experience with the rich is that they are often remarkably ignorant of the world - often astonishingly anti-intellectual...

Recognising the limitations of Wikipedia -  the article in question does have a very large warning...
    The neutrality of this article is disputed.

...at the top of the page that Dave should have mentioned.
Dear Dave:

Someone who writes stuff like that obviously does not know what a dictatorship is, besides all of those comments have a strong denotative interpretation of the facts.

My country survived a 48 year fascist dictatorship. In those days opposition parties were very happy if allowed to participate in elections, even though they knew there would be more votes from dead people than from living ones, and that the state police controlled the whole balloting process. And of course some months later the people involved in the opposition parties would be hunt and sent to jails from which they might not come back.

Comparing Chavez to a dictator is a nonsense. If someone from a political side opposing yours is elected (like Chávez or Amahdinejad), that doesn't mean an election fraud, it just tells you that other people think different from you.

I see my remarks have been miscontrued and exagerated in the context of my post, so I'll try again. Perhaps I have expressed myself badly.

To begin with, I am sympathetic to the Bolivarian Revolution as long as the people prosper. However, this does not contradict the fact that Chavez is trying to assume "extra-special" powers. I did not compare Chavez to a dictator. As far as the Wikipedia article goes, I quoted it only because it summarizes the contentions about Chavez succinctly and provided references to other stories, some of which I quoted. I am fully aware of the bias that can appear in their articles.

There are questions, serious questions, about Hugo's policies vis-a-vis a fully democratic system. This response goes for the other criticisms I encountered above.

It's ironic for me to get lambasted on this issue since my politics are well left of center.

best, Dave

Yes indeed it is ironic, I guess you tried to give a wider independent view of the situation and we misinterpreted it.

It's easy to think about dictatorship when overriding democracy is mentioned.

It is always dangerous to get in to the political side of the things we discuss here; maybe it is a good practice to avoid it. Of course sometimes this might not be possible.


Re: I guess you tried to give a wider independent view of the situation and we misinterpreted it.

Thanks for saying this.

Politics and oil are inextricably intertwined, not only in Venezuela but everywhere else too. There is no avoiding the subject. I am well aware of the bias of the American MSM toward Chavez that reflects the party line. Some of the criticisms directed toward my story in this thread express an equal bias-the other way. However, I don't think there is bias in the reporting of Joe Duarte at Rigzone. I could be wrong but it's not the business of such energy related websites to imitate Fox News. And when I say that Hugo is a "megalomaniac" and then am accused of culminating a post hoc ergo prompter hoc argument, it is apparent to me that someone commenting on this thread doesn't know Latin. Perhaps he meant ad hominem. In any case, someone who denies that Hugo is a powerseeking narcissist doesn't know one when he sees one, even if he is a politician of the socialist variety. Many American communists in the 30's even up through the 50's refused to believe that Stalin was a bad guy. I'm not comparing Chavez to Stalin but merely trying to show just how far such denial can go in an extreme case.

'nuff said.

I forgot the American MSM had such a "liberal" bias. Maybe that is because the few corporations controlling the American MSM are owned and controlled by the poor and the homeless, or is it really the "commies" behind it all? Better dead than Red. Haven't you heard that "commie" isn't the boogieman under the bed now, it's "terrorist".
"Limousine liberal" is the proper term.  They may be confused with their first cousins; "Hollywood Liberals".  They have very little in common with "Progressive Liberals" other than a similar name and occasional support for the same csndidates.
 While the US left seems to be almost unanimous in its support for Chavez, it turns out the PDVSA is a colonist within Venezuela. They are making developments in the rural areas without the consent of the local communities, many of which have reported serious illnesses from the production or refining of the heavy oil. Many have also lost their fishing and farming businesses due to the pollution.

6 years into the Bolivarian Revolution "Our Oil And Other Tales" shows children and parents rummaging in the garbage dumps. Even with $70/barrel oil,  this film shows that some folks in Venezuela are being left out of  The Rev.

 Also I don't doubt that Venezuela's production has plateaued as they have increased royalties and taxation from private companies, and taken majority control in their corporate boards. But declining production within the context of tight supplies, means skyrocketting prices. I wouldn't doubt that they've done the math.

 Last, I hear about this new union with Cuba, Venezuela and Bolivia.  Cuba gives Venezuela doctors in exchange for oil.
Bolivia gives Venezuela soy beans in exchange for oil and technical assistance. But what does Bolivia give Cuba in exchange for the doctors? It sounds like in the short term, Bolivia will be a solidarity project for Cuba more than a stategic economic partner.

Cuba trains lots of doctors, sends them everywhere, has been doing so for decades.
It's solidarity. it's PR, it's foreign policy. And it works. Cuba is popular most places, USA is the exception.
Hello TODers,

Detritus entropy affects all, and Overshoot continues--the Thermo-Gene Collision is universal.  Chavez and Morales populist appeals will be tightly constrained in the future as fossil fuel declination is sub-optimally dispersed among their countries' inhabitants. A brain drain and in-country flight of elite wealth to other shores will only gain momentum with time.  The remainder will be eventually be forced to economic and/or civil in-fighting over the shrinking pie, unless outside IOC investment is welcomed back to help temporarily extend the 'infinite growth' paradigm for another brief run before the crushing weight of geologic inevitability closes in.

The streamlining of economic flows to consolidate competitive force projection is not possible in a country dominated by a populist mindset.  They will find themselves at a distinct disadvantage to international corporate consolidation, which is only gaining speed, and transcends any sovereign borders. A hypothethical Gazprom-XOM-Aramco-ADM-industrial weaponry corps-etc profit oriented linkup to streamline econ-flows through detritus control can be easily foreseen.

Ted Koppel, of Nightline fame, has written a highly controversial article projecting just this result: mercenary forces operating at the behest of corporate entities to clearly control and demarcate the economic winners and losers in the Detritus Scramble.

So, what about the inevitable next step -- a defensive military force paid for directly by the corporations that would most benefit from its protection? If, for example, an insurrection in Nigeria threatens that nation's ability to export oil (and it does), why not have Chevron or Exxon Mobil underwrite the dispatch of a battalion or two of mercenaries?
This article is available to all in Matt's LATOC news & update section, and I encourage all TODers to please read it.  When someone as obviously media-influential as Koppel  is starts discussion in this direction: then the '3 days of the Condor' scenario is not far off.

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

In the 90's and this decade, oil companies shy away from fights and are more likely to pay blackmail and other demands to leave them alone, so they can produce oil.
Congress is debating drilling in ANWR today:

to direct the Secretary of the Interior to establish and implement a competitive oil and gas leasing program that will result in an environmentally sound program for the exploration, development, and production of the oil and gas resources of the Coastal Plain of Alaska, and for other purposes


Looks like Bartlett Opposes Drilling in ANWR:

Congressman Roscoe Bartlett Opposes Drilling in ANWR

Washington, DC - Congressman Roscoe Bartlett spoke in opposition to a bill, H.R. 5429, that would open the Antarctic National Wildlife Refuge (ANWR) for oil drilling. A copy of his prepared remarks is below:

"In the past year, two major studies were done for the federal government, one for the Department of Energy and one by the Army Corps of Engineers.

Both said that we were at peak oil -- when the maximum oil production capacity in the world will be reached -- and that the consequences would be devastating.

America has only 2 percent of the world's known oil reserves." We produce 8 percent and consume 25 percent of the oil produced worldwide and import close to 2/3 of the oil we use.

With those statistics in mind, I am having trouble understanding how it is in our national security interest to use up our little bit of oil as quickly as we can.

If we could pump ANWR tomorrow, what would we do the day after tomorrow?

We are saddling our children and grandchildren with an unconscionable debt.

We should not deny them access to these finite energy sources.

Drilling in ANWR is not the right thing to do at this time."

Roscoe comes across a bit hokey at times, but he is smart in a very diverse way, a kind and thoughtful man, and one of the few with the pelotas to be saying these things loudly and publicly.

I like any politician who has the Hirsch report linked on their home page. And I quite agree with almost all of his points. I have to laugh though when he diverges from scientific energy discussions with phrases like "and in the 5000 years of planetary history"...

I think hes probably too old but if he ran for president, Id vote for him. Enter the engineers, exit the clowns...

ANWR is a potentially a strategic reserve, but one that would be most difficult to tap in any sort of an emergency and one which could easily be pushed / over produced if the S really does HTF. The most irritating aspect of this this controversey is the totally nutty positions taken by both sides.

Most of anti drilling propoganda centers around emotional appeals about the breeding and calving grounds of the caribou and the damage that would be done to a pristine environment [while the director rolls stock footage of the friggin beautiful Brooks Range -- not the coastal plain where the oil is supposed to be!] While I am certain that the coastal plain may be considered beautiful in its own way, the mosquito driven caribou migrations should tell most people about all they would need to know about the poetntial for human enjoyment of this part of the great outdoors.

The other bogus argument by "the we should not drill" side is that even if we drill now, the oil will not come on stream for X number of years. True ... but also a truly goofy bit of logic. Reduced to its essential elements, this line of reasoning would totally reject the concept of planning for the future which would in turn mean that anything that does not result in instant gratification should not be undertaken.

From the other side, many of the pro drilling types make ANWR out as some sort of a hanging curve ball just waiting for the slugger to knock it out of the park.

For crying out loud, how about an honest fact based debate?

I totally agree with Bartlett. "we should not drill in ANWR AT THIS TIME."

Why drill it when it is so evident we will waste it? If we drill it in two decades, it might be make an enormous difference.

Also, why not use up other people's oil first?

Hm, unless they feel the same way? But I agree with you ANWR.
In today's Financial Times is an intersting article (behind wall):

"Norway and India join hunt for oil in waters off Cuba."  Apparently, there is oil (and gas etc.) on both sides of the line twixt Cuba and Florida.  The US repeatedly refused to develop these fields (not that I argue with this policy, although the hypocracy of these NIMBY pols who turn around and bang on about ANWAR is duly noted).  HO had some posts about sideways drilling and, the laws of 'first to develop the field owns it' rule.  There might not be a lot there (on Cuba's side of the fence), but who knows about the rest?


Good post generally, BUT

"The Bush Team have the usual concerns that Venezuela is moving away from democracy--which, ironically, is actually true in this case."

Any documentation? I do know that he has won several internationally supervised elections (including by former Prez Carter's group), plus a referendum, plus has a popularity rating at least double our President's. In addition, he survived a coup, which was reversed due to massive popular support and support from the lower ranks of the military. Those that momentarily replaced him abolished the constitution and much else -- all to the applause of the Bush administration.

I won't run down our recent presidential electoral experiences, none of which were internationally monitored, even though they seriously needed to be.

I do not know for sure if I detect in your post any exasperation at the sub-optimal rate of extraction and production in Venezuela. I'm certainly in no position to argue the ins and outs of its reality. But it is in no case something to bemoan unless there is permanent damage to the fields. I would think that is something we here at TOD could agree on, no?

I posted this in haste, after reading Dave's post. The same points had already been made others.

Fact is, what's good about TOD is that we span the spectrum and can argue these things respectfully.

And in that spirit, I suggest that people read up on the history of US involvement in Latin America. Keep a tally of the number of coups, assassinations, invasions, destabilizations, etc. You'll need a small spreadsheet. There's no way I am going to defend every move Chavez makes. But I do defend his standing up to the US, his paying attention to the poor (health, education, etc.), his trying to unite with other Latin America Countries, his forthright defense of Iran in face of US threats, and in general his support for the idea that each country has a right to make decisions about its own resources, to make its own mistakes, without getting bombed, destabilized, or invaded. What I fail to understand is  why this position is controversial.

Drat! I also forgot to mention a very good documentary on the 2002 coup: THE REVOLUTION WILL NOT BE TELEVISED. Admittedly, it seems a little hoaky and propagandistic. But then, all of a sudden, one realizes: this is a DOCUMENTARY, not fiction! The footage was taken by an Irsh film crew that was there before, during, and after the reversal of the coup.

It is really a quite amazing film -- to see a coup from the inside AND to see it reverse itself! A great deal of the footage is taken from inside the Mira Flores palace. You get a very clear picture of the opposition to Chavez, of what they really stand for. You also get a picture of what Chavez forces are like: idealistic, good hearted amateurs. I hope that only the last feature is changing. Some of these scenes are quite amusing, almost unbelievable, except it's live footage.

i saw that documentary too.
i also have bookmoarked a small and incomplete list of what the cia has done around the world to 'protect the american way of life' this country has alot of blood on it's hands that the majority of people can't see.
I saw the documentary on Canadian television.  (Documentaries there are good and plentiful.)

Where did you see it?  

I cannot imagine it was shown in the states, although I would like to hope so.
It was shown briefly here in NY at one theater. There may have been a few other places, not sure. I remember one  place chickened out under duress -- but I forget the details.
The part where the pro-Chavez crowd was getting shot at by snipers was really, really intense.



Can someone explain, in geologic or chemical terms (for the layman) what the major difference is between the heavy oil in Venezuela vs the tar sands in Canada? Im pretty comfortable with an EROI range for tar sands around 2-3:1, not including environmental externalities. (at least at first)

But Im unsure as we get closer to push comes to shove internationally how fast and how much net can really come online from the heavy oil in Orinoco..thanks

Can someone explain, in geologic or chemical terms (for the layman) what the major difference is between the heavy oil in Venezuela vs the tar sands in Canada? Im pretty comfortable with an EROI range for tar sands around 2-3:1, not including environmental externalities. (at least at first)

Yes, I'd also like to hear more about this. And another question I'll throw into the pot - what source of energy would be available for extracting the heavy oil? Does Venezuela have large natural gas reserves?

I also have to wonder if the resulting pollution of their water resources wouldn't have a devastating effect (washing down the Orinoco River and into the Carribbean). Lots of people depend on the Carribean fisheries for survival. Is Canada able to contain the pollution in the Athabasca region?

They have some major hydroelectric dams just upriver.  Friend worked on recent 2,000 MW one. Guri, another BIG dam, was once world's largest.

Solar preheat and then electrical resistance heat for steam injection seems doable, and sustainable for a few hundred thousand barrels/day.

Less aluminum production, more heavy oil might be the tradeoff.


This post needs to be responded to because while the Oil Drum has been an invaluable source of information the information here is just factually wrong.  Venezuela is not producing 2.6 MBPD as the author cliams.  It is producing over 3 MBPD.  In fact for 2005 it produced precisely 3.08 MBPD.  I am mystifified that the author claims as his source the International Energy Agency when the IEA published a very nice chart in its March 2006 Oil Market Report detailing Venezuelan prodution.  I posted a copy of that report in the following post:


To a certain extent the confusion is understandable given that Venezuelan oil production consists of different types of oil and the figures can easily be manipulated by leaving out certain types of oil.  But you will note when they are all tallied Venezuelan production is over 3 MBPD and has been increasing ever since the oil strike ended in 2003.

For those who prefer visuals I did a graph of the IEA numbers with the OPEC quota superimposed here:


As you can see Venezuela essentially produced at quota last year, save for a slight shortfall when they did have some production problems.

You will also note that Venezuelan production has been steady over chavez's tenure, save the the strike.  The major cut in prodution came in 1999 when Chavez first came to power and cut production to conform to OPEC quotas, Venezuela had been a quota buster to that point, and boost prices.  So the people, such as the Rigzone article which is a piece of crap, who say Venezuelan production is down 60% simply have no idea what they are talking about.

A very illuminating blog post.
However, I must question your assertion that Venezuela is deliberately underproducing non-Orinoco oil so as to atay within its OPEC quota. Were it doing so, it would be extraordinarily stupid, since no other country on earth is deliberately underproducing at present, and no other OPEC member is being restrained by its quota (KSA's claims of extra capacity are fraudulent). Therefore, unless you can present direct and convincing evidence, I will not believe this claim.
It depends on what you mean by deliberately underproducing.  Do they have a spigot they can turn and more oil would come out?  No.  You can't just have spare capacity laying around unused.  It dissappears after a couple months as the wells fill in (this happens fast in Venezuela's mature fields).  No one is going to waste money creating capacity only not to use it - it costs about $2 billion to bring 100k of daily oil output on line.

Rather, what I meant is Venezuela has to cut back on other production to accomodate the new Orinoco Heavy oil production and still stay within its quota.  That is why their production of lighter oils has declined.

Of course, this is very bad business for Venezuela.  The much less profitable Orinoco oil is displacing more profitable traditional oil.  It only made sense to bring the heavy Orinoco oil on line if you planned on ignoring OPEC quotas which of course prior Venezuelan governments did.  Going foward don't expect to see much happen with Orinoco oil.  I'm sure the Venezuelan government would be happy if those projects just shut down.  They are losing billions and billions by them being in operation.

I'm not taking a position here, but the EIA numbers for crude plus condensate show a significant decline over that period for Venezuela.
Oilwars, I read your cited post with interest. Here's what I actually said.
However, this current production number has been disputed as coming from the political opposition in Venezuela, so how much oil they are actually producing remains something of a mystery.
I reported based on Duarte and the EIA (I never mentioned the IEA). In addition, Duarte reported that PDVSA has not reported to the SEC in the last two years, which your post does not contradict.

Your cited text from the IEA is very illuminating. Essentially, the difference is including the synfuels from "heavy" oil production and this does indeed bring their production tally up to their OPEC "quota".

Your remarks reflect just the kind of discussion that I was trying to provoke. I will make two pertinent observations.

  • In any politically charged situation, views of the situation will vary wildly.
  • Venezuela's estimates of their own production (which the IEA seems to accept--as they always do) only emphasizes the lack of transparency in oil reserves & production, especially where state-owned companies are concerned.

So, on balance I presented one pessimistic view of the production in Venezuela and you have presented a contradictory view. This is not unexpected and just the kind of conversation I was looking for. Other observations, like their dealings with China to whom they export 300/kbpd, are not in dispute. Neither is the growing antagonism with the US or what happened in Bolivia.

Thanks for you post and counterargument. Everyone interested in the subject should read your cited remarks Venezuelan oil numbers confirmed.

best, Dave


Thanks for the clarification on where your numbers came from.  Hopefully, everyone sees the updated numbers now and that Venezuela is producing over 3 Million Barrels a day.

One more fallicy from the Rigzone article though is the notion that PDVSA isn't filing its audited financial statements with the US Securitites and Exchange Commission.  It is.  In fact last fall I analyzed the one from 2003 that they released and showed how it confirmed production was back up around 3 MBDP:


I also linked to the report on the SEC site.  It is VERY detialed with all sorts of information on reserves, production, types of oil, rig counts, etc.  To anyone interested in the venezuelan oil industry I highly recommend they read it.

The 2004 report is due out any day.  Indeed the reports have been late but that is due to pretty much the entire finance department joining the oil strike  in 2002 and being fired.  Worse still, the accounting record keeping had been outsourced to a private company that also joined the strike and refused to turn over any records.  When they got a definitive order to do so by a court they claimed they no longer had them.  Given that, it is understandable the reports would be late.  But they received and unqualified endorsement by KPMG auditors so this shows PDVSA has its books in order, is transparent, and has been telling the truth about its production numbers.

The main difference is the Orinoco heavy oil are NOT tar sands.  It is actually liquid oil and gets pumped out of the ground like regular oil - not mined like the Canadian Tar Sands.  It is only after it is above ground that it tends to congeal.

Here is an article on it by Oliver Campbell who is an excellent source of information on the Venezuelan oil industry having worked both for Shell in Venezuela and later for PDVSA:


Of course, the other HUGE difference is the Canadian oil is not located in a country ruled by OPEC quotas and the Orinoco oil is.  That makes the Canadian oil profitable to exploit while the Venezuelan oil isn't from the Venezuelan governments point of view.

Somewhere back there (don't have a link, sorry) Laherrere and others have pointed out that the Athabasca tar sands heavy crude and the Orinoco heavy crude (usually referred to as 'bitumen') are very much alike in weight, quality, etc. The major difference between the two is the latitude at which they exist. The Orinoco bitumen benefits from being much warmer to begin with and thus takes less energy to extract, though still a lot more than conventional crude.
Anyone else chime in with harder data.
I have sort of a technical question: Insofar as Venezuelan production has dropped due to lack of expertise in maintaining the infrastructure, etc., how much of this is oil that is lost forever?  Is there any way to have any clue about this?
It actually works the other way around, Phil. Underproduction, due to whatever reason, seldom hurts a field's longterm viability. Letting a pump break down actually allows a well to  'rest', and certainly does not reduce either its total capacity (volume) nor its flow rate once pumping is resumed.
I think the worries of Venezuela not getting enough outside investment are overblown because of....you guessed it...China! As the American Empire appears to be drawing to a close due to  peak oil, military overstretch, & international loss of credibility among other things, China has started to step in. We see them everywhere...Sudan, Iran, Venezuela, Canada.

When Peak Oil does arrive, obviously China will also suffer. However, the vast majority of the pain will be on the U.S., ending about 20 years of a unipolar world. Time to start learning Mandarin...