Chavez Nationalizes Venezuelan Oil Fields Venezuelan President Hugo Chavez nationalized the last privately run oil fields in the country Tuesday as the government took over projects run by some of the biggest petroleum companies.
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Chavez Nationalizes Venezuelan Oil Fields

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Chavez Nationalizes Venezuelan Oil Fields

Chavez Nationalizes Venezuelan Oil Fields

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It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.

This is May Day, International Workers Day. Not a huge holiday in the United States, but a big one in socialist countries, and there is a lot going on this May Day in Latin America.

In a moment we'll go to Havana, Cuba, where there are rumors that Fidel Castro might appear in public for the first time since last summer. He's been ill, of course. First we go to Venezuela. That's where President Hugo Chavez has a self-styled socialist revolution and his populace government is taking control of four big oil projects. Venezuela, of course, is a major oil producer and these projects have been operated by some of the world's biggest companies, including ExxonMobil and BP and Chevron.

NPR's Juan Forero is covering this story. And Juan, what does it mean when Venezuela says it's taking over these projects from the big oil companies?

JUAN FORERO: In Venezuela what is happening today is called nationalization, not a seizing of property but rather the state exerting its control over its resources. It's all part of Hugo Chavez's effort to squeeze more from the multinationals that came here years ago. They came because they were lured by what was considered very low royalty rates, virtually no taxes in a particular part of Venezuela called the Orinoco Belt.

Chavez has seen these companies rack up record profits as oil prices have spiked and he's determined that Venezuela should get bigger and bigger pieces of the pie. In this way he's not all that different from Putin in Russia or from other governments around the world that are taking a bigger cut of the energy profits. But of course Chavez does it with revolutionary fervor.

INSKEEP: Well, let's figure this out, then. The oil companies get to stay but they're going to have to pay more of their profits to Venezuela and they are essentially put on notice they could be kicked out at any time. Is that right?

FORERO: Well, they're not really put on notice that they're going to get kicked out at any time. Venezuela now has anywhere from 30 to 49 percent stake in these four huge projects in the Orinoco Belt and what they're basically doing is they're jacking that up to about 60 percent. That means that Venezuela's going to have much more say over what happens with the projects in the future. What's unclear is exactly what kind of operations these will become with Venezuela in the lead.

INSKEEP: Could any of this affect the oil supply to the United States?

FORERO: In the short term there's no impact for American supplies. However, it's true that Venezuela is looking to diversify its oil buyers. Chavez blames the U.S. for trying to oust him in a coup a few years back and he's been railing against the Bush administration ever since. Part of the punishment is to find other buyers, but it's a tough sell for Venezuela. The United States has the refineries to process Venezuelan oil, it's a short tanker trip away, and it buys most of this country's production. Now, though, the Venezuelan state oil company, which is called Petroleos de Venezuela, is clearly in the driver seat.

INSKEEP: Give us some idea of how Venezuela might be able to spend the extra money it's going to get out of all this.

FORERO: Venezuela is interested in sowing the oil as they call it here. And so what they want to do is spend it on social programs - literacy programs and health care and so forth. There's been some criticism of that by a lot of oil analysts because Petroleos de Venezuela invests very little of its money in production and refining. A lot of people here say that Petroleos de Venezuela is actually a shell of its former self and that the oil industry is not doing so well.

INSKEEP: Could some of this money be used to spread Venezuela's power through the region and effectively cause trouble for the United States?

FORERO: Well, it depends how you look at it. Certainly the Bush administration is not happy with anything that Chavez does, and they see Chavez gain considerable influence through the money that he receives from oil. Now, of course, the Chavez administration has a completely different point of view and that is that they're trying to form trade alliances as well as geopolitical alliances and that it's all a bulwark against American imperialism.

INSKEEP: NPR's Juan Forero is in Caracas, Venezuela, where today the government is taking over control of some major oil projects.

Thanks very much.

FORERO: Thank you.

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