HA HA! Take that Chavez!

[Flubber]

Originally posted by Kidicious

Oh, Ok. They didn't get a good deal? Why did they sign on to it then.

Oh so any deal someone does is a very good deal?? So your deal with your employer must be a very good deal etc etc??

Part of yor justification is ttat Exxon got such a sweet deal from a former regime that its only RIGHT that it be nationalized away.

Originally posted by Kidicious



I'm just assuming that Exxon didn't accept a risk and pay for it. Something wrong with that? I can see why you are trying to bring up meaningless details though.

You will probably find the actual facts of the deals involved AND the fact that Chavez was making deals with oil companies to be more of those meaningless details.

After all, why let any facts get in the way of your good story

[Kidlicious]

Originally posted by Flubber
If you care about facts, I found this article



A 1% royalty is exactly what is paid in Canada for oilsands projects or offshore projects. To an ignorant person it may seem 'too low' but this rate only survives until the proponents of a project achieve "simple payout" and then escalates to rates in the 25 to 30 percent range. An upper range of 16.67% IS lower obviously but may or may not be a "sweet deal" depending on the size of the resource, technical issues, other fees and income taxes etc etc. The political risk would absolutely be higher in Ven. than Canada so even that could account for a few percentage points difference

You do realize that you may make two different deals for the same price and make more profit (less risk) on one right?

[Flubber]

Originally posted by Kidicious


You do realize that you may make two different deals for the same price and make more profit (less risk) on one right?

Kid if you'll recall I have given you lessons on project finance

That was the point I was making sure you are clear on--a 16% royalty on one project and a 25% royalty on another might be fair


IN Canada I see royalties of 5% on one deal and 25% on another for lands next door. Both are fair since the 5% is on deep unproven oil (expensive to get to and risky) while the 25% was for a shallow proven play

[Flubber]

Note this one

http://www.paulhastings.com/assets/publications/661.pdf?wt.mc_ID=661.pdf

It gives some stuff of the general timing of Chavez's moves.

But it does confirm the idea that a lot of what Chevez was doing was undoing his own deals.

It seems pretty obvious that he made changes to royalties but kept reassuring the companies so that they would invest. Then when oil prices got so high he pretty much reneged on all his dealings and just snapped everything up

[Kidlicious]

Originally posted by Flubber
Oh so any deal someone does is a very good deal?? So your deal with your employer must be a very good deal etc etc??

There's a huge difference between a person "making a deal" with their employer and a multi-national corporation making a deal with the government. A multi-national corporation has to evaluate risk and make cost/benefit analysis. People simply take the best job they can get.

Just admit it that the risk of nationalization was calculated into the deal.

Part of yor justification is ttat Exxon got such a sweet deal from a former regime that its only RIGHT that it be nationalized away.

Let's be clear. Exxon is a multi-national corporation, and I could care less whether they got a fair deal. As far as I'm concerned the only way to justify giving power to corporations the way people do is to get benefit out of them. I think Hugo feels the same way, and that's what he did.

You will probably find the actual facts of the deals involved AND the fact that Chavez was making deals with oil companies to be more of those meaningless details.

See my last comment.

[Kidlicious]

Originally posted by Flubber
Kid if you'll recall I have given you lessons on project finance

That was the point I was making sure you are clear on--a 16% royalty on one project and a 25% royalty on another might be fair

IN Canada I see royalties of 5% on one deal and 25% on another for lands next door. Both are fair since the 5% is on deep unproven oil (expensive to get to and risky) while the 25% was for a shallow proven play

"Fair" isn't what the price is set at. The price is negotiated. The oil company will try to get the lowest royalty rate that they can. That said they take into consideration the risks involved.

You are just trying to make this complicated, and it's very simple.

[Dinner]

Chavez is now threatening to withhold oil to the US in response to the orders British and Dutch courts have made. As if he could afford to not export oil or that oil exported to other countries wouldn't find its way to the US. Sucks for Chavez to have to deal with the realities of a fungible commodity.

Still no lose for Chavez to rant about evil imperialists & stir up nationalist support.

Venezuela threatens to cut US oil

Venezuelan President Hugo Chavez has threatened to cut off oil supplies to the US if it continues what he calls an economic war.

"Take note Mr Bush, Mr Danger," said Mr Chavez in his weekly televised address. "I will cut off oil supplies."

British and US courts froze assets belonging to Venezuela's state energy company last week.

The move followed an application by US oil giant Exxon Mobil for compensation from Venezuela's state oil company.

The Texas-based company claims the amount offered for the nationalisation of its oil installations in Venezuela was insufficient.

Mr Chavez has said the nationalisation plan would bring billions of dollars of resources back to the people, a key part of his socialist revolution.

Imperialist bandits

In his address on Sunday, he described Exxon's management as imperialist bandits who form part of a US government-backed campaign to destabilise Venezuela.

"I speak to the US empire, because that's the master: continue and you will see that we won't sent one drop of oil to the empire of the United States."

"The outlaws of Exxon Mobil will never again rob us."

But the fight will be tough, says the BBC's James Ingham in Caracas.

While Mr Chavez is a strong leader who rallies against what he calls the evils of capitalism, Exxon is renowned as a hard corporate player.

And cutting off oil deliveries to the US would be damaging to Caracas as well as Washington.

While the US would struggle without the crucial oil supply, Venezuela would also suffer from losing its biggest oil customer.

The threat, then, may be too risky for Mr Chavez to carry out, and he has threatened to cut off his country's oil supplies to the US before.

Even if he does not, however, the latest outburst does highlight a growing ideological divide that daily shows little sign of easing.

http://news.bbc.co.uk/1/hi/world/americas/7238214.stm

[Kidlicious]

Originally posted by Oerdin
Still no lose for Chavez to rant about evil imperialists & stir up nationalist support.

Well that's why it's so stupid to be an imperialist.

[DinoDoc]

Doesn't he find it emberassing to make the repeatedly make the same threat and not carry it out? One might come to the conclusion that he's afraid to.

[Kidlicious]

Originally posted by DinoDoc
Doesn't he find it emberassing to make the repeatedly make the same threat and not carry it out?

Hell no. He can keep making the same threat and there's not a damn thing the US can do about it. It's the fact that he can make the threat and demonstrate that that is his power.

[DinoDoc]

Originally posted by Kidicious
Hell no. He can keep making the same threat and there's not a damn thing the US can do about it.

Why should anyone care about empty threats?

[Agathon]

Originally posted by Flubber

Only in your mind, nowhere else.

Actually no. You all seem to have a pretty limited grasp of argument and almost no capacity for lateral thinking or subtlety. But that's a separate topic.

Actually what you said would kill much investment. If there is a moderately high risk that you can lose everything for essentially nothing, the possible returns HAVE to be astronmically high to justify the risk. I know that the ability to get recourse outside the jurisdiction that wronged you is a key factor in companies being able to do any business in some places. . . IT reduces the chances of a severly negative rate of return. So yes they factor in these types of things-- They call it 'political risk'-- but part of that assessment is their ability to use worl, US or UK courts/tribunals to obtain recourse.

You might as well not have bothered typing most of this you could have simply said: "inverse of risk x desirability = justifiability"

But you've missed the whole point. It may well be worth it for a developing country to accept a lower rate of investment in order to maximize returns in the long run. There are very good reasons for developing countries not to spread their cheeks for multinationals. Similarly, I might have money to lend but have situational reasons for attaching harsh conditions, even though it makes it harder to find a borrower.

Another debate for another day and your last comment there shows your bias in any event.

In other words, avoiding a debate you will get thrashed in. I'm blunt because those on the other side deserve as much respect as the moon landing hoax theorists.

The problem on your formulation is that there would have been NO ONE at all from whom to get such permission, Right ??

You aren't doing yourself any favours here.

Take two governments. One (a) is a tyranny; the other (b) is a democracy. You can get permission to drill from either. Only permission from (b) necessarily generates a moral obligation from that country to keep its side of the bargain (since b represents the interests of the rightful owners). Permission from (a) may generate a partial moral obligation (depending on how non-representative the tyranny is), or none, or the same moral obligation (if the tyranny accidentally makes the same bargain that legitimate representatives would in good faith).

The case carries over as follows. You may well receive permission to build on my property from someone who does not legitimately represent me (or partially does, or perhaps a representative who might act with absolute incompetence on my behalf). In such cases at most a limited obligation is generated on my side, and in most cases none. If I nor a competent, legitimate representative of mine is available and only one of these people is, you bargain at your peril and cannot complain if you get the short end of the stick. On the other hand, If I, being of sound mind, tell you that you may build, then it's fine. In both cases, there is someone to get permission from, but only in one case are you insured against me deciding otherwise down the track. Pretty simple really.

That's a simple case. It can get much more complicated.

[Kidlicious]

Originally posted by DinoDoc
Why should anyone care about empty threats?

Because they want all the oil, and everything else they can get their greedy little hands on.

[Patroklos]

I agree with Kid. Venezuala should have never made any deal with the oil companies in the first place, then the citizens of Venezuala would still have all their oil.

I am sure when they paddle bare foot over their fields they would be content knowing their precious oil is safe and sound, unmolested by pumps and well and pipelines from nasty imperialists. I am sure it would be doing them all sorts of good down there.

[DinoDoc]

Originally posted by Kidicious
Because they want all the oil, and everything else they can get their greedy little hands on.

Do you understand what the words empty and threat mean when put together?