January 13, 2008 at 11:23 pm #3829
Chavez Says to End Asphalt Sales, May Seize Companies (Update1)
By Steven Bodzin
Jan. 13, 2008 (Bloomberg) — President Hugo Chavez of Venezuela, whose country is the biggest foreign supplier of asphalt to the U.S., ordered exports halted to save material for domestic use. He also said he’d nationalize companies that monopolize road materials.
“Stop the exports of asphalt,” Chavez told Energy and Oil Minister Rafael Ramirez during the weekly presidential television broadcast. When Ramirez told him project delays were a result of “monopolies,” Chavez said, “I want results. Tell me, hey President, it’s these 20 companies that aren’t complying. We’ll expropriate them.”
Chavez, while frequently calling the U.S. “the empire” and criticizing its foreign policy, has never previously cut off exports. Petroleum exports account for about 90 percent of Venezuela’s foreign exchange and half of tax revenue.
A cutoff in asphalt sales may violate supply contracts with NuStar Energy LP. Venezuela agreed to the contracts when selling two asphalt refineries to the San Antonio-based company Nov. 7; NuStar spokeswoman Mary Rose Brown said Nov. 13 the company had agreed to the terms. Brown didn’t immediately return calls to her office and mobile phones outside business hours today.
Venezuela expropriated a plant belonging to Colombian materials company Cementos Argos SA in August and soon afterward sent environmental inspectors to a plant owned by Cemex SAB.
The U.S. received 739,000 barrels of asphalt directly from Venezuela in October, according to U.S. Energy Department figures. The Netherlands Antilles, where Petroleos de Venezuela has a refinery, sent another 52,000. These supplies equaled 4.3 percent of the 18.3 million barrels of asphalt that the Energy Department says were supplied in the U.S. that month.
Petroleos de Venezuela SA, where Ramirez serves as president, conducts tasks usually performed by government ministries, including paving roads. Local leaders complained to Chavez today on his show, “Alo Presidente,” that the oil company had failed to improve roads as planned. Chavez later talked to Ramirez on the phone and demanded results.
“The biggest cities in the U.S. are paved with Venezuelan asphalt,” Chavez said. “They get it from here very cheap. The best asphalt in the world. New York, Washington. Boston. These cities and highways all across the U.S. are paved with our asphalt. How can it be that here, our people are fighting for roads?”
To contact the reporter on this story: Steven Bodzin in Caracas at email@example.com . Last Updated: January 13, 2008 18:53 EST
January 13, 2008 at 11:31 pm #7106
Here is update on Venezuela Asphalt Sales & November sale of Citgo Asphalt plants to NuStar (See Coking.com post). It just goes to prove the adage no good deal goes unpunished by Chavez! And that when you deal with a company or country that doesn’t honor its agreements, you cannot expect them to do so with you.
Having so far escaped reaction from siezing crude fields, upgrading assets and other trumped up tax / tariff positions, Chavez/Pdvsa will only continue to do so with the growing Venezulea problem of the day until US government backs our companies position and protects their international rights for trade, at least a counter tariff on import crudes and products that would reimburse companies like ConocoPhillips, ExxonMobil, NuStar and Chevron.
January 15, 2008 at 1:00 am #7105
Is this serious or editorial rhetoric?
January 15, 2008 at 10:37 pm #7102
Why would a person jeopordize 90% of a business’ primary stated revenue? This sounds like staging.
January 16, 2008 at 4:54 am #7100
Stupid actions do not require a belief in logic chain for them to occur (unfortunately). You want proof otherwise then you go chase it down for change.
Need to remember we ARE talking about someone that goes out of his way to insult his largest customer (US), sell some of its former crude supply for less money to China (~cost Venezuela $3billion for extra freight, delayed payment of 30 days vs 16 day trip to China, and limited upside based on low complexity level of average refinery).
Also Chavez is all about making the Venezuelan poor see him as champion and blaming the poor roads on US taking the country’s asphalt lets him escape telling them it is because the Government transportation system is courpt and incapable of doing its job (especially at government values they pay for asphalt vs market price).
However I wouldn’t rule out that it may be bluster to open the contract value NuStar got from Citgo purchase (might have been at PDVSA internal transfer price asphalt and just realized US market has had 3 major price hikes in last 3 years). Since the NuStar asphalt refineries are US assets he has already sold – no chance he can take them over, but he can always refuse honor contracts as he has been. Beyond understanding why Venezuela is not being held accountable by tough action from US and our companies are left to flounder around in international courts to get justice.
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