Sunday, August 30, 2009

communists can't do capitalism

Fears over Chávez threaten oil auction
By Benedict Mander in Caracas
Published: August 30 2009 18:27 | Last updated: August 30 2009 18:27

The future of one of the world’s biggest oil auctions is in jeopardy as Venezuela’s socialist government and oil companies remain at loggerheads over terms to develop a key oil field.

Repeated delays in the bidding for rights to exploit the Orinoco Belt – which was postponed for a third time at the end of last month – reflect investor concerns about political risk, onerous financing costs and the profitability of the projects. Lower oil prices and a stuttering global economy only add to the problem.

. . . At the top of the list were fears about the unstable political climate in Venezuela and the unpredictability of President Hugo Chávez as he championed his socialist revolution.

“Security is still the big X-factor,” said Pietro Pitts, the Caracas-based editor of Latin Petroleum Magazine. “Scarcely a month goes by without the government taking over another private company,” he said, highlighting the expropriation of the assets of more than 70 oil service companies this year.

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