by Carmen Gentile
08-03-06
With its vast oil supply and Latin America’s largest natural gas reserves,
Venezuela has quickly become a major energy powerbroker in the region and the
world.
South America’s only member of OPEC has benefited hand over fist from inflated
oil prices and utilized soaring global energy prices to its advantage. Venezuela
is exporting an estimated 3.3 mm barrels of oil per day, with prices set at
about $ 50 per barrel.
The spike in oil prices over the last year has put tens of billions of extra
dollars in Venezuelan coffers and prompted President Hugo Chavez to expand his
vision for an energy-integrated Latin America. Chavez already sends 100,000
barrels of oil per day to Cuba, in exchange for which Venezuela receives a cadre
of Cuban doctors and other medical personnel to assist the nation’s less
fortunate.
But by cozying up to Cuba’s Fidel Castro, Chavez has drawn the ire of officials
in Washington, who accuse the Venezuelan leader of trying to create a Cuba-style
regime at home -- a criticism Chavez does not take lightly. The outspoken
leftist has complained vehemently in the last year that Washington was trying to
undermine his authority and even aided those seeking his ouster.
A short-lived coup in April 2002 saw Chavez briefly removed from office, only
to return to power two days later. The Venezuelan president accused the US of
aiding the coup plotters -- an allegation the administration of George W. Bush
has denied. Since then, US officials, including Defence Secretary Donald
Rumsfeld and Secretary of State Condoleezza Rice, have cast aspersions about
Chavez and warned he could become a catalyst for unrest in the region.
“If what they [the US] want is to break relations with Venezuela, it’s up to
them,” said Chavez during a pro-government rally in February. “It doesn't cost
me anything to close our refineries in the United States or sell the oil that
goes to the United States to other countries around the world.”
It would, however, certainly harm US energy interests, considering the 1.5 mm
barrels of oil it receives from Venezuela every day, fulfilling a major portion
of American energy needs. Chavez maintains he does not want to cut off
Venezuelan oil supplies to the US, either. Venezuela is the fourth largest
supplier of oil to the US, behind Canada, Mexico, and Saudi Arabia.
“We don’t want to go to such extremes,” he said. “Let them decide. What we want
is to be left in peace, that the imperialist government finally accepts that
Venezuela is free and is not and never will be a colony of the United States.”
He has noted that other countries, like China, would be more than happy to make
up for Venezuela’s losses in the oil sector if relations between Caracas and
Washington reached a breaking point.
In a move considered part-peacemaking, part-propaganda, Chavez has sent large
quantities of discounted oil shipped to several US cities to ease the burden of
rising heating costs for poor and elderly US citizens during winter months.
Earlier, the US state of Connecticut joined the Bronx borough of New York City,
along with Delaware, Massachusetts, Maine, Rhode Island, Pennsylvania, and
Vermont in receiving 4.8 mm gallons of heating oil at a 40 % discount for poor
households. Chavez has also ordered that free fuel be given to homeless shelters
in those states.
The recipients of the gesture must quality for state assistance in heating their
homes this winter in order to be eligible for a share of the Chavez-mandated
shipment.
Leaders in Connecticut, like many in the other states where poor Americans
otherwise might suffer the bitter cold this winter, praised Venezuela for its
generosity and made a point of stressing its necessity and compliance with US
laws.
“This heating oil assistance fills an unfortunate, profoundly important need for
our citizens -- and is consistent with our laws,” Connecticut Attorney General
Richard Blumenthal said.
But other US officials took a different view. Republican Congressman Joe Barton
from Texas has publiclyquestioned whether the donations are “part of an
unfriendly government's increasingly belligerent and hostile foreign policy”.
Barton has ordered an investigation into Venezuelan-owned oil company Citgo,
which is based in Houston, and demanded that the company hand over all
paperwork, emails, and other material related to the donation program to US
officials for inspection. A letter drafted by Barton’s office asks Citgo to
answer numerous questions relating to the donations, including “how and why were
the particular beneficiaries of this program selected” and if the program “runs
afoul of any US laws, including but not limited to, antitrust laws”.
“The bellicose Venezuelan [Chavez] decided to meddle in American energy policy,
and we think it might prove instructive to know how,” said Larry Neal, deputy
staff director for Barton’s committee.
Lawmakers in favour of the donations questioned Barton’s motivation for
condemning the oil shipments, as the Texas Republican congressman has been a
beneficiaryof large campaign contributions from US energy companies.
“The Republicans are on another planet when it comes to energy policy,” said
Massachusetts Democratic Congressmen Markey. Markey also stressed his disbelief
that Barton and other Republicans would investigate “a charitable donation of
heating oil to relieve the suffering of a few thousand American families”.
Some Venezuelan experts said the oil donations were a “public relations
gesture to guild the Chavez image” and were indeed an effort to embarrass the
Bush administration.
“Chavez says he likes the United States, but doesn’t like the [Bush]
administration,” an analyst and former deputy assistant secretary of state for
Western Hemisphere affairs told. Meanwhile, Chavez has looked to neighbours like
Brazil, Cuba, and Uruguay to forge new energy partnerships, such as oil
refineries, and has already spent upwards of $ 5 bn on the initiatives. The
idea, according to Chavez, is to become more self-sufficient and home and rely
less on the US as an energy trading partner.
His independence ideal is one echoed by many Latin American leaders,
including Brazilian President Luis Inacio Lula da Silva, who though a more
moderate leftist, has also espoused the need for greater regional integration.
Among the products headlining the Chavez agenda is a proposed gas pipeline
running from the Venezuelan north all the way down to the tip of Patagonia, a
nearly 8,000-km conduit for the country’s estimated 148 tcf of natural gas
reserves.
“Oil will gradually run out around the world and more and more countries will
turn to gas. Latin America will also have to switch to gas,” Venezuelan Oil
Minister Rafael Ramirez recently told. “In fact it's much more efficient to
generate energy using gas than with oil.”
Some analysts simply do not agree with that assessment or Chavez’s ambition
to create a continent-long pipeline.
“It doesn’t make sense,” Frank Verrastro, an energy analyst with the Centre for
Strategic and International Studies, told, noting that the multi-billion project
would have to cross over some of South America’s most difficult terrain.
Verrastro said it seemed that potential partners Brazil and Argentina were
getting caught up the “political rhetoric” of the plan, namely the quest for
greater local integration, rather than considering whether it was a profitable
scheme for all involved.
“Chavez is willing to subsidize projects that just wouldn’t be feasible
otherwise,” he said, noting the danger of such a move if oil prices fall in the
coming years.
Both Brazil and Argentina already import gas from nearby Bolivia, which
boasts the continent’s second largest reserves.
“It’s geopolitics trumping commerciality,” said Verrastro.
Ramirez said during the pipeline talks among Venezuelan, Brazilian, and
Argentine officials that the decision to move ahead with the project already had
been made.
“We’ve already taken the political decision to build this pipeline. Now we're
discussing the technicalities,” he told. It does remain unclearjust how the
three nations would divide the cost of the project.
Carmen Gentile is a senior international correspondent for ISN Security Watch
based in Rio de Janeiro. He has reported from Iraq, Afghanistan, and Bolivia for
Security Watch, and Haiti, Venezuela, and elsewhere for United Press
International, The Washington Times, and others.
Source: ISN Security Watch