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Regime change for profit: Chevron, Halliburton cheer on US Venezuela coup

If Guaidó comes to power and privatizes PDVSA, U.S. oil companies — with Chevron and Halliburton leading the pack — stand to make record profits in the world’s most oil-rich nation, as they did in Iraq following the privatization of its national oil industry after U.S. intervention.

by Whitney Webb

Part 2 - Profitable but not Rockefeller-profitable

Chevron’s history in Venezuela is long and storied, as its presence in the country dates back more than a century. Over that time, Chevron’s presence in Venezuela has remained a constant despite the rule of drastically different governments, from military dictatorships to the socialist Chavista movement.

For much of its history in Venezuela, Chevron has had to deal with the Venezuelan government’s laws regarding oil production, particularly a 1943 law that held that foreign companies could not make greater profits from oil than they paid to the Venezuelan state. A few decades later in the 1960s, foreign corporations were made to manage their oil extraction projects in Venezuela by working closely with the Venezuelan Oil corporation, which later gave way to the current state oil company PDVSA, created in 1976. It was around this period that Halliburton first began work in Venezuela.

However, foreign corporations — particularly American ones — disliked having to settle for minority stakes in PDVSA projects and longed for the early days of Venezuela oil extraction when companies like Rockefeller-owned Standard Oil made wild profits off their Venezuelan oil assets.

After the “apertura petrolera” (or “oil opening” to foreign investment) in the early 1990s — and especially under the U.S.-backed government of Rafael Caldera, the president who immediately preceded Hugo Chávez — it seemed that the privatization of PDVSA was soon to become a reality and companies like Chevron, ExxonMobil and Halliburton enjoyed the “golden age” of American oil interests in Venezuela. However, Caldera’s fall from grace and the rise of Chavismo quickly shattered this decades-long dream of U.S. corporations and politicians.

Not only did Chávez end any possibility of PDVSA’s privatization, he also weakened what remaining influence transnational oil companies had over the state oil company. For instance, he appointed independent oil experts to PDVSA’s board of directors, upending years of precedent where PDVSA managers with close ties to international companies had been responsible for controlling the board’s membership.

Chávez further restricted corporate ownership on some oil projects to 49 percent and fired PDVSA’s then-president, replacing him with a political ally. These drastic changes, among others, led to a strike among many long-time PDVSA workers, a strike that immediately preceded the failed U.S.-backed coup attempt in April 2002.

Following the coup, Chávez dismantled a joint venture originally established in 1996 between PDVSA and the Venezuelan subsidiary of the U.S.-based company SAIC, known as INTESA. INTESA, per the agreement, had controlled all of PDVSA’s company data (and its secrets), which it then fed to the U.S. government and U.S. oil corporations until Chávez destroyed it. This is hardly surprising given that the managers of SAIC at the time included two former U.S. secretaries of defense and two former CIA directors. Though obviously a smart move for Chávez, it weakened an advantage of U.S. corporations who had inside information on PDVSA while INTESA was operational.

The tensions between the Chavista government and the U.S. government along with U.S. corporations only grew from there before reaching a crescendo in 2007. That year, Chávez announced a decree that would nationalize the remaining oil extraction sites under foreign company control, giving PDVSA a minimum 60 percent stake in all of those ventures. U.S. oil companies ExxonMobil and ConocoPhillips left their Venezuelan operations behind as a result, losing billions in the process. The president of ExxonMobil at the time was Rex Tillerson — who would later become President Donald Trump’s first secretary of state.

Yet, during this time, Chevron, unique among American oil companies, saw an opportunity and spent the next several years cultivating close ties to the Chavista government and Chávez himself. Through the efforts of Chevron executive Ali Moshiri, Chevron blazed a new trail that would later serve as a model for foreign oil companies seeking to do business in Chavista-led Venezuela. Halliburton and another U.S.-based oil services company, Schlumberger, also decided to continue business in Venezuela.

During this time, the Venezuelan government through PDVSA and Chevron entered into several joint ventures, one of the most important of which became known as Petropiar, which blends Venezuela’s heavy crude oil with other substances to make it more easily transportable. However, Chevron — due to Chávez’s reforms of the oil sector — was forced to settle for minority stakes in all of these ventures.

Halliburton, which has historically been a main operator for Chevron-owned oil fields, again partnered with Chevron’s post-2007 ventures in Venezuela and operates the Petropiar and Petroboscan oil fields that both have minority Chevron ownership.

For years, Chevron’s bet on Chavismo paid off and the profits rolled in. Moshiri even appeared in public on several occasions with Chávez, who once even called the Chevron executive “a dear friend.” However, following Chávez’s death in 2013 and the beginning of the U.S-backed economic siege of Venezuela soon after — first through joint oil-price manipulation in cooperation with Saudi Arabia and then through sanctions — the profits of PDVSA, and thus Chevron, have fallen dramatically. During this time, Houston-based Schlumberger drastically scaled back its operations in Venezuela.

Since then, relations between the Maduro-led government and Chevron have deteriorated precipitously and now, with the current U.S. coup in motion, Chevron is poised to turn on the Chavista government with the hopes that profits will not only improve but exceed what they were during the heights of the Chevron-Chávez partnership.

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