If you thought high oil
prices were just a blip
think again. In an exclusive
interview with Greg
Palast for BBC Newsnight the Venezuelan President
Hugo Chavez has ruled out any return to the era of
The colourful Venezuelan leader hosts the OPEC meeting
on June 1 in Caracas and he will ask OPEC to set $50
a barrel - the average price last year - as the
long term level. During the
1990s the price of
oil had hovered around the $20 mark falling as
low as $10 a barrel in early 1999. Chavez told
Newsnight "we're trying to find
The price of oil could remain at the low level
of $50. That's a fair price it's not a high
price". Hugo Chavez will have
added clout at
this OPEC meeting.
US Department of Energy analyses seen by Newsnight
show that at $50 a barrel Venezuela - not Saudi
Arabia - will have the biggest oil reserves in
OPEC. Venezuela has vast deposits of extra heavy
oil in the Orinoco. Traditionally these have not
been counted because at $20 a barrel they were
too expensive to exploit - but
at $50 a barrel
melting them into liquid petroleum becomes extremely
profitable. The US DoE report shows that at
today's prices Venezuela's oil reserves are bigger
than those of the entire Middle East including
Saudi Arabia, the Gulf states, Iran and Iraq.
The US DoE also identifies Canada as another future
oil superpower. Venezuela's deposits alone could extend
the oil age for another 100
The US DoE estimates that Chavez controls 1.3
trillion barrels of oil - more
than the entire
declared oil reserves of the rest of the planet.
Hugo Chavez told Newsnight's Greg Palast that
"Venezuela has the largest oil reserves in the
world. In the future Venezuela won't have any
more oil - but that's in the
Venezuela has oil for 200 years." Chavez
ask the OPEC meeting in June to formally accept
that Venezuela's reserves are now bigger than
Saudi Arabia's. Chavez's increased muscle
not go down well in Washington. In 2002 the
Bush administration welcomed
an attempted coup
against Chavez. He told Newsnight that the Americans
had organised it in an attempt to get hold of
Venezuela's oil. Ironically by invading Iraq
George Bush has boosted oil prices and effectively
transferred billions of dollars from American
consumers to Chavez. Up to $200
day - half of it from the US - is flooding
into Caracas. Chavez is spending this on building
infrastructure and increasing the minimum wage and
improving health and education
in the poor ranchos
which surround the cities. As a result even his
opponents accept that Chavez is extremely popular
and will easily win the next
havez is also spending billions in the rest of Latin
America - exchanging contracts for oil tankers
and infrastructure projects and buying up loans
in Argentina and Brazil. He has made cheap oil
deals with Ecuador and the Caribbean. He has
also spent some of the dollars which have come
in from the US supporting Fidel Castro in Cuba.
In return Cuba has supplied the thousands of doctors
and teachers who are transforming conditions in
the barrios of Caracas. Washington accuses Chavez
of buying influence in Latin America.
The Newsnight team had to endure
the long speeches
and marathon six hour TV shows
which Hugo Chavez
delights in. Chavez posed for Newsnight posing with
the sword of Simon Bolivar the 18th century liberator
who drove out Spanish imperialists
America. The symbolism was clear but behind the
showman is a clever political brain.
Chavez has not invaded any foreign
He does not have secret prisons
at home or
abroad. Chavez has repeatedly won democratic
elections and the pposition operates freely
although some members have been
accepting illegal foreign donations. Nonetheless
George Bush's administration repeatedly targets
Chavez on human rights and finances
Earlier this year US Defense Secretary Donald Rumsfeld
compared Chavez to Hitler--because
he was elected
year the influential
American evangelist Pat Robertson called for
his assassination. Robertson later apologized
and said that he did not "necessarily"
be killed so long as he was kidnapped by American
Chavez told Newsnight that he
was still concerned
that George Bush had not learnt
the lessons of Iraq
and would order an invasion to try to secure
Venezuela's oil. "I pray this will not happen
because US soldiers will bite the dust and so
will we, Venezuelans". He warned that any such
attempt would lead to a prolonged
and an end to oil production. "The US people
should know there will be no oil for anyone".
Chavez does not accept Tony Blair's criticism
of him for lining up with Fidel
Castro. He told
Newsnight "if someone is sleeping together it is
Bush and Blair. They share the same bed."
Chávez seeks to peg
oil at $50 a barrel
Monday April 3, 2006
Venezuelan president Hugo Chávez is poised to launch a bid to transform the
global politics of oil by seeking a deal with consumer countries which would lock in a price of $50 a barrel. A long-term agreement at that price could allow Venezuela
to count its huge deposits of heavy crude as part of its official reserves, which Caracas
says would give it more oil than Saudi Arabia.
have the largest oil reserves in the world, we have oil for 200 years." Mr Chávez told the BBC's Newsnight programme in an
interview to be broadcast tonight. "$50 a barrel - that's a fair price, not a high price."
The price proposed by Mr Chávez is about $15 a barrel below the current global level but a credible long-term agreement
at about $50 a barrel could have huge implications for Venezuela's standing in
the international oil community.
According to US sources, Venezuela holds 90%
of the world's extra heavy crude oil - deposits which have to be turned into synthetic light crude before they can be refined
and which only become economic to operate with the oil price at about $40 a barrel. Newsnight cites a report from the US Energy
Information Administrator, Guy Caruso, suggesting Venezuela
could have more than a trillion barrels of reserves. A $50-a-barrel lock-in would
open the way for Venezuela, already the
world's fifth-largest oil exporter, to demand a huge increase in its official oil reserves - allowing it to demand a big increase
in its production allowance within Opec.
Venezuela's oil minister Raphael
Ramirez told Newsnight in a separate interview that his country plans to ask Opec to formally recognise the uprating of its
reserves to 312bn barrels (compared to Saudi Arabia's 262bn) when Mr Chávez hosts a gathering of Opec delegates in Caracas
next month. Venezuela's ambitious
strategy to boost its standing in the global pecking order of oil producers by increasing the extent of its officially recognised
reserves is likely to face opposition. Some countries will oppose the idea of a fixed price for the global oil market at well
below existing levels. Others are unlikely to be happy with any diminution of their influence over world oil prices in favour
of Venezuela. Caracas's hopes for an increase in its standing would be a far cry from the days when Mr Chávez came to
power after years of quota-busting during which Venezuela helped to keep oil prices down. "Seven years ago Venezuela
was a US oil colony," said
As he seeks to bolster his country's
standing on the world stage, the Venezuelan president has also introduced radical changes to the domestic oil industry. Last
Friday his government announced that 17 oil companies had agreed to changes which will see 32 operating agreements become
30 joint ventures that will give the government greater say over the country's oil industry.
The original deals were signed in the 1990s as part of a drive to attract more investment into the country's oil industry.
However Mr Chávez said the deals gave foreign companies too much and the government too little. Under the new arrangements
state-run Petroleos de Venezuela will hold 60% of the joint ventures. "Now we are associates and this commits us to much more
... it's no longer a contract for doing a service, it's a strategic alliance," Mr Chávez told the companies that signed up.
The new arrangements were not universally
welcomed by the oil companies. Exxon Mobil and the Italian energy company Eni have refused to sign up to the new arrangements.
Mr Chávez, a former paratrooper
who has survived several attempts to oust him and who faces re-election in December, regards Venezuela's oil revenues
as crucial to his plans to fight poverty. Critics accuse him of squandering the country's oil wealth on improvised social
programmes. The Venezuelan president used the Newsnight interview to attack
the role of the International Monetary Fund in Latin America, where it has a reputation for pushing market-based
reforms as the price of its help to countries struggling with their finances.
The Chávez government has helped
a number of countries, including buying Argentinian and Ecuadorean bonds, with Mr Chávez arguing that he would like to see
the IMF replaced by an International Humanitarian Fund.
Hugo Chávez was born in 1954. The former paratroop colonel
first came to prominence after a failed coup in 1992, for which he was jailed for two years. He was elected president
of Venezuela in 1998, launching
a social programme known as Bolivarianism, after the revolutionary Simón Bolívar, and reversing planned privatisations.
In 2002 he survived a coup attempt and, two years later, a bid to unseat him in a referendum. He has close links with Cuba's
Fidel Castro and has frequently clashed with the United States.