BP, Exxonmobil, & Chevron Knowingly Supporting Terrorism

The announcement made by Chavez on May 1 is regarded as the culmination of the nationalization campaign. In fact, almost all international oil majors such as BP, ExxonMobil, Chevron, Total and Statoil, but not ConocoPhillips, have agreed on the state control strategy taken by the Venezuelan government in principle. The government warned it would expropriate the assets of these companies if they refuse to follow suit. Iran is planning on building an oil refinery in Faga, in Venezuela's oil-rich Orinoco province. IRNA news agency reported on June 1, 2007 that the refinery will refine heavy oil into gasoline and other oil derivatives.

The Venezuelan president said in a joint press conference with his Iranian counterpart on Monday (7/2/07) in Assalouyeh of Khuzestan province that the two countries have also agreed to establish an international import and export company. Earlier this month (June 2007), Iranian authorities gave backing for the launch of an oil exchange that traded solely in euros. Iran, the second-largest exporter in oil producing nations group Opec, insists it merely wants to build nuclear power stations, but the US claims it is building nuclear arms. Venezuela, the world's fifth largest oil producer, has been trying to reduce its dependence on the US, as relations have been strained under President Hugo Chavez. In April of 2007 it signed a joint venture with Cuba - a long time opponent of the US - to revamp an oil refinery and supply unrefined oil to the country at a considerable low price.

Last week, the Iranian government began rationing fuel, causing angry Iranians to smash shop windows and set fire to dozens of gas stations in the capital Tehran and several other cities. The government says the fuel rationing will free up funding for development projects and make the country "invincible." Iran is one of the world's biggest oil producers, but it doesn't have enough refineries, so it must import more than 50 percent of the gasoline its people use. The rationing is part of a government attempt to reduce about $10 billion it spends each year to import fuel that is then sold to Iranian drivers at far less than its cost, to keep prices low. An increase in gas prices last month and the rationing have fueled Iranian discontent with hard-line President Mahmoud Ahmadinejad, who was elected in 2005 on a platform of helping the poor and bringing oil revenues to every family. His failure to do so has sparked widespread criticism. Iranians are accustomed to gasoline at rock bottom prices. After a 25 percent hike in prices was imposed May 21, gas sells at the equivalent of 38 cents a gallon.

Just recently in 2006, the Venezuelan government mandated foreign oil companies to sign a new agreement with PdVSA on the establishment of joint ventures. Differing from the previous PSCs (production sharing contracts), the new agreement would enable PdVSA to assume a 60-70 per cent stake in each joint venture. Compared with the nationalization move taken during the 1970s oil crisis in Venezuela, this time the nationalization action doesn't sideline foreign oil giants completely. For instance, Chavez has invited big oil companies to stay as partners but with a minority stake, so all final decisions will be made by Chavez.