Thomko Petro Chemical Blog

Relocating for work . . . 

From Filipino electricians in western Australia and Indian petrochemical engineers working in the Persian Gulf, to Latvian stone masons in Northern Ireland, the world’s labor force is on the move.

Globalization means that not only are companies are moving operations offshore to where there is cheaper labour – but workers are increasingly prepared to cross borders to find where the best jobs are.

Popular images of migrant workers are of the of the poor, the oppressed and unskilled. Yet according to Manpower, one of the world’s largest recruitment companies, they are more likely to be young, under 30 years of age, well-educated with university or vocational qualifications, and female as much as male.

This matters to employers who, according to Manpower, will increasingly be competing for workers, such as the managers at Irish meat processing plants “whose skilled Slovak butchers are being lured away by competitors in Norway”.

Unlike earlier migrations, today’s migrant workers are not on a one-way trip. Flights home are readily available. Irish emigrants began returning a decade ago as the economy of the “Celtic Tiger” boomed. Now, it is Indian professionals and Polish construction workers who are returning to seek new opportunities.

Competition for such workers is increasing. Even oil-rich Gulf states can no longer rely on a seemingly endless flow of cheap engineers and construction workers from the Asian sub-continent.

One Gulf company, for example, told Manpower it was “starting to miss crucial project deadlines” because it could not “import the skilled expatriate engineers and project managers it used to be able to get easily.”

Propelling labour mobility over the next few decades will be huge demographic changes, in particular the ageing and stagnating populations in developed countries. According to the United Nations, Italy’s population is expected to decline from 57 million to 41 million by 2050 while Japan’s is projected to fall 17% to 105 million by 2080.

Workers are also becoming more aware of their worth, with the internet providing much greater information on job opportunities at home and abroad, says Manpower.

Workers will also move within national boundaries to find work. China is currently struggling to accommodate “the rush of individuals leaving its poor western provinces in search of better jobs in the glittering commercial hubs of the country’s east coast,” it says.

Japan has also seen a huge population shift to its cities, imperilling its agricultural sector, while Norway must deal with the emptying of its rural north - and Mexico’s southern states contend with…a massive talent drain to the industrialised northern border states.

Employers who have moved offshore in search of cheap labour can get caught out, however, as local economies develop and other multinationals move in, competing for a limited number of skilled workers. According to Manpower, it is not unusual for workers at call centres in Bangladesh to attend an interview, accept a new job and start straight away at a higher salary all in the same lunch hour, says Manpower.

Read full article at FT.com

http://www.ft.com/cms/s/0/2ff92332-3ed2-11dd-8fd9-0000779fd2ac.html?nclick_check=1

Chavez Says E.U. Countries That Back Migrant Law Won't Get Oil   

Venezuelan President Hugo Chavez said he'll prohibit sales of oil to European Union countries that apply a new law approved by the E.U. parliament that allows undocumented workers to be detained. Chavez has also stated that Venezuela also won't accept foreign investment from those European countries.

Venezuela won't attend a meeting of oil producers and consumers this weekend in Saudi Arabia, and sees no need to increase crude output, the country's oil and energy.

Venezuela has no plans to increase its oil output, Minister Rafael Ramirez told reporters today in Maracaibo.  The Organization of Petroleum Exporting Countries doesn't need to meet again before its next scheduled event in September, and says that oil production levels aren't behind the increase in prices.

More news out of Venezuela . . .  

Chavez isn't content with nationalizing the countries oil - today he has formally taken control of the cement industry by decree, and has given three foreign companies 60 days to negotiate a fair price for their assets. Should they fail to reach an agreement, he stated Venezuela will start expropriating shares.

According to the decree, the government will take at least a 60% stake in the Venezuelan subsidiaries of Mexico-based Cemex SAB, Switzerland- based Holcim Ltd. and France-based Lafarge SA.

Chavez is using a windfall from oil exports to increase state control of the economy. Since the beginning of 2007, he has nationalized four crude oil ventures as well as the country's biggest telephone company and electricity provider.

Source: Bloomberg

CARACAS, Venezuela: Venezuela is rerouting oil to China that had previously been sent to a U.S. refinery co-owned by its state oil company and Exxon Mobil Corp., Venezuela's oil minister said Friday.

Rafael Ramirez said Exxon has stopped ordering crude for a refinery in the New Orleans suburb of Chalmette as legal wrangling between the Irving, Texas-based company and Petroleos de Venezuela S.A., or PDVSA, continues.

"Everything went to China," Ramirez told reporters.

PDVSA and Exxon are locked in a fierce legal battle over compensation for the 2007 nationalization of a jointly owned heavy oil project in Venezuela's Orinoco basin.

Ramirez vowed last month that PDVSA would meet its existing contracts with Exxon, including continued shipments to Chalmette. The refinery processes about 190,000 barrels a day, but does not depend exclusively on Venezuelan crude.

International Herald Tribune

While Alaska has lots of oil money, residents of many remote villages are living with a cruel irony - they cannot afford to heat their homes because their fuel bills are 2 - 3 times the national average.

U.S. nationwide home heating fuel averages $3.30 a gallon, but averages $4.30 a gallon in Alaska - and in the remote villages the cost is $9 a gallon. Gasoline is now averaging just over $3 a gallon nationally, but averages $4.54 in Alaska, and jumps to $7 a gallon in the remote areas!

The cost of shipping oil to the remote areas of Alaska by plane or barge is steep - despite the state's vast oil wealth. Most of the oil must be shipped as crude to the West Coast to be refined, and then sent back to Alaska.

The state's lawmakers are looking at offering hundreds of dollars in rebates to help remote villages offset their home heating bills - but they only have a short time to address this issue before the legislative session ends - and Hugo Chavez steps in to embarrass them once again.  

It seems in the past Chavez has been far quicker to come to the aid of Alaska's remote village residents. Last year Venezuelan oil company Citgo donated $5 million of free heating oil to poor communities in Alaska.

Arctic Village is one such community where fuel has to be flown in because this remote community is hundreds of miles off the normal roadways, and this village cannot be reached by barge. The residents in these areas depend on fuel to travel by snowmobile, ATV or boat to hunt and fish.

Alaska's state revenue will benefit a surplus of $3 -$4 million this year because of high oil prices, along with a recent hike in oil taxes. But lawmakers are looking at a steady 6% drop in production at the North Slope oil fields.

So it's a choice between giving some of that money as rebates to the poor, or keeping some of the surplus which will help tide the state over until the North Slope project is finished - but that's at least 10 years away.

Tell that to Ed Littlefield, a Vietnam veteran who suffers from diabetes, lives on disability, and looks for wood to chop so he can heat his home. He's gone without fuel for days. He says, " Everybody hates Hugo Chavez, but we thank him for the fuel that lasted about 3-4 months last year".

Republican Bill Thomas represents nearly 50 small communities in the state's southeast panhandle, he suggests a $500 payout to state residents, at a cost of about $360 million that would be paid from the profits of the state's oil wealth savings account - a $38 billion Alaska Permanent Fund.

But fellow lawmakers do not want to touch the earnings fearing Alaskans would perceive it as a raid on the fund that pays them an annual dividend - $1,654 for nearly every man, woman and child last year.

Other lawmakers caution against putting money into assistance programs that will just have to be cut in the leaner years, along with giving the perception of Alaska as a free loader state with "cash giveaways" - especially after the infamous "bridge to nowhere" federal earmark.

So while the lawmakers quarrel about what to do, residents may still have to depend on Venezuela this year to help them heat their homes and provide fuel for transportation.

Source: AP

Venezuelan President Hugo Chavez, who has threatened to cut off oil sales to the U.S., said reports that making such a decision would hurt his country's economy are false, and that Venezuelan oil can be sold anywhere.

Chavez denounced an editorial published this week in the Washington Post, which said the president's government would be the "first victim'' if he decided to cut off oil sales to the U.S.

"If the U.S. didn't need the oil, they would have boycotted us a long time ago,'' Chavez said last night in an interview on state television, according to an e-mailed statement from the information ministry. "Try it then. We've got more buyers than we can handle in the first place.''

Read full story at Bloomberg

Venezuela's state-run oil company has announced it is cutting crude sales to ExxonMobil, the largest U.S. oil company, because of Exxon's efforts to seize Venezuelan assets.

Petroleos de Venezuela said in a statement Tuesday its move is retaliation for what it calls ExxonMobil's economic harassment. ExxonMobil has not yet responded to Venezuela's decision.

British and Dutch courts last week granted ExxonMobil's demand to freeze as much as $12 billion in Venezuelan oil assets.

The company is challenging Venezuela's decision to nationalize a large oil project in which ExxonMobil had a large financial stake.

Venezuelan President Hugo Chavez has threatened to cut off oil sales to the U.S. if the court decision freezing the assets is upheld on appeal.

But a senior Venezuelan oil official said Tuesday Chavez is unlikely to carry out his threat, saying it would be costly for both countries, and the U.S. is Venezuela's biggest crude oil customer.

Source: VOA News

Venezuela will open a bid round for private companies to develop a block of the nation's Orinoco heavy crude belt.

This announcement comes only months after President Hugo Chavez took over four multi-billion-dollar Orinoco projects, pushing out Exxon Mobil and ConocoPhillips in the process.

Brazilian energy giant Petrobras has worked with Venezuela's state oil company PDVSA to certify the Orinoco oil reserves, which are estimated to be close to 10 billion barrels.

Venezuela has also signed a deal with France's Total to certify reserves in a block of the Junin area of the vast Orinoco reserve.

The Orinoco belt is a reserve in southeastern Venezuela that holds billions of barrels of heavy, tar-like oil that can be upgraded into lighter, more valuable crude.

Source: Reuters UK
http://uk.reuters.com/article/oilRpt/idUKN0252168620080202

Hugo Chavez is running his own "oil for food program"

Chavez has offered Central American and Caribbean countries the option to pay for oil with services or local products, such as bananas and sugar.

This offer was made by Chavez at the Petrocaribe summit of oil consumers and exporters in Cuba last week.

"Despite the Yankees, our gas is at the service of Venezuela first, and next to our brothers in the Caribbean," Chavez said in a reference to the U.S.

The Petrocaribe alliance is composed of 17, with Honduras becoming the latest member during last weeks summit . However Petrocaribe members have found themselves in debt to Venezuela to the tune of $1.16 billion in a little over a year. So now Chavez is proposing to offset billions of dollars worth of oil debt with food products - along with some services too.

Petrocaribe allows nations to repay Venezuela over up to 25 years with 1% interest as long as the price of crude is above $40 a barrel.

Chavez also offered other countries the option of following Cuba, which is repaying its bill by sending doctors who offer free services to the poor in Venezuela. And he also called for creating an international fund to promote solar, wind, geothermal and other alternative energy sources.

Brazil and Venezuela's state-owned petrochemical companies are joining forces to build a $3.52 billion petrochemical complex in Venezuela.

The complex is anticipated to be the most modern and competitive integrated petrochemical project in the region. Investments of $900 million is needed to have the facility up and running by 2010.

Two separate companies will be created to push the joint venture. One facility will be a polypropylene facility that will produce 450,000 tons per year. Polypropylene is used for food packaging, ropes, textiles, stationery, plastic parts and reusable containers of various types, laboratory equipment, loudspeakers, and automotive components.

An additional facility will build an ethane plant using natural gas as feedstock. The $2.6 billion facility will be capable of producing 1.3 million tons of ethylene and 1.1 million tons of polyethylene annually. It expects to be operational by mid 2012. Ethylene is the most produced organic compound in the world.

The petrochemical products will be marketed to Venezuela, South American nations, the U.S. and Europe.

A social revolution is underway in Venezuela with Chavez making threats to cut off U.S. oil on Monday, and demanding to be president for life. 

He accused the U.S. of sabotage of this weekends election, along with a U.S. sabotage of the country's oil fields and other facilities.

And he said if he loses today's election - it's the U.S. fault - and he threatened to cut off oil shipments promptly Monday morning.

Protestors have already taken to the street, the military has been put on alert, and half of the opposition has withdrawn from the election process.

Ultimately Chavez's goal is win complete control over the congress, and approve constitutional changes that would keep him in power for life - or til 2050, in which case he will be 95 years old.   

Chavez spoke to a large crowd in Caracas on Friday about a possible sabotage during today's election of the country's oil fields and other government installations. He has ordered the army and other military units to be on full alert guarding these facilities.

He also threatened to expel CNN and other international broadcasters from the country if they publish election polls a week before the election, or before the polls close - broadcasting poll results a week before an election, or before the polls close on election day is against the law in Venezuela.  

Chavez speech also had others in his cross hairs, which include the elite citizens of Venezuela, American and European imperialists, and the King of Spain. Of course the protestors taking to the streets are surely on his list, and he has advised police to take strong counter-offensives against the opposition. And if some of the military are planning a possible coup, the deployment to guard the oil fields and other facilities might make that a little harder to carry out.

Today the vote for his referendum is a yes or no vote. Chavez told the crowd on Friday that "You know that those who vote 'yes' are voting for Chavez and those who vote 'no' are voting for George W. Bush," that's the true confrontation we are in."

Opposition parties are worried the election board could rig the vote. Possible rigging of the vote is not the only issue. Many of the opposition parties have already withdraw from today's election because of a dispute over electronic voting machines. (Ah yes, we remember those same machines from our last election) A fourth party just recently announced it was also withdrawing, which means that more than half of the opposition has pulled out.

Back in 2005, opponents made the disastrous decision to boycott the legislative elections which allowed pro-Chavez slate to take control. Will history repeat itself?

Cuba and Venezuela have signed an agreement for nickel and oil development, along with a billion-dollar petrochemical complex to be built on the island of Cuba.

Chavez also has plans to build an underwater fiber optics cable between the two countries. The joint venture involving nickel is to mine the metal, and then turn it into ferro-nickel.

Cuba's oil is of a low quality crude, however Chavez has plans to upgrade the oil quality, along with exploring offshore blocks in Cuba's Gulf of Mexico waters, and oil exploration off the western coast of Cuba.

The agreement signed today by Venezuelan President Hugo Chavez, and acting Cuban President Raul Castro, was actually brought about when Fidel Castro and Chavez founded the Bolivian Alternative for the Americas back in 2004. The 2004 pack has two other countries, Bolivia and Nicaragua, and is an alternative to U.S. free trade initiatives in the region.

Cuba and Venezuela have 19 other joint ventures on the board in several different sectors - especially energy. A Cuban super tanker port is on the drawing board, along with dormant oil refineries that were abandoned when the Soviet Union collapsed.

The new agreement calls for the building of a plant to turn liquefied natural gas back into gas, a fertilizer plant, and the construction of other petrochemical plants around the refinery.

London's mayor announced Monday that half price bus tickets for poor Londoner's will be funded by millions of oil dollars courtesy of Hugo Chavez.

An initial one-year deal will see Petróleos de Venezuela Europa, the European arm of the state oil company PDVSA, spend up to $32m to subsidize bus fares for residents in the UK capital who receive low-income welfare payments.

Up to 250,000 citizens in London will benefit under the half price bus plan conceived by Chavez when he visited the UK last year.

In return, London is establishing an office in Caracas, Venezuela’s capital, that will school officials there in techniques of traffic management and urban planning.

This bus ticket deal is only one of the many recent pledges by Venezuela to assist countries throughout Latin America, the Caribbean - and even as far as Belarus to finance energy projects and offering cheap credit.

London's Mayor denied being seduced by Chavez. He told reporters "Frankly I’d rather be getting into bed with Chavez than the policy of the British government has of getting into bed with US president George W. Bush.” WOW!

However the critics in Britain ask why one of the world's richest cities and financial hubs is accepting handouts from a developing nation with less than a fourth of Britain's GPA. Good question.

However Chavez is supplying 100,000 poor U.S. households with heating oil at a 40% discount, so we should be asking the same question. 

But we won't because neither London or the U.S. is interested in assisting the poor, so Chavez will continue to play the "good guy" looking out for the poor and less fortunate of the world.

Countries like Venezuela, Iran and Russia are intent on building up their domestic oil industries, while reducing reliance on foreign oil companies. This obviously serves their best interests, but for consumers in the U.S. it means a growing dependence on more countries that don't share our best interests - CT

On Tuesday Exxon Mobile and ConocoPhillips were not in attendance at the signing under the new terms for Venezuela's Orinoco River basin. Back in May the Venezuelan government took a majority control of the oil projects held by foreign oil companies, and Tuesday was the deadline date for foreign oil companies to agree to the new terms.

Four of the major oil companies, Chevron, BP, France's Total and Norway's Statoil decided to accept the Chavez governments new terms as junior partners.

Although Exxon Mobile refused to sign the new terms, company officials stated they will continue discussions with the Venezuelan government.  And ConocoPhillips said it would reserve the right for international arbitration if their future talks with Venezuela falls apart.

Analysts said this will not have a major effect on higher prices at U.S. pumps because production by the two companies will shift to other producers who agreed to the pacts.

Venezuela is not alone with oil reserves being controlled by the government. Three-quarters of the world's proven reserves are controlled by state monopolies that bar private participation completely.

See Previous Posts:

Venezuela Seeking to Become Petroleum Regime

Planets Largest Oil Supply

Venezuela Raising Tax Royalty Rates

Venezuela Seizes Foreign Oil Fields

Exxon Mobile Not Welcome

The presidents of Venezuela and Brazil have clashed over the issue of ethanol at the start of an energy summit hosted by Venezuela on the Caribbean island of Margarita off the coast of Venezuela.

Venezuelan President Hugo Chavez had hopes the energy summit will help foster anti U.S. unity, but Brazilian President Luiz Inacio Lula de Silva (shown here) is open to Bush's proposal to promote ethanol production in developing countries.

Chavez opposes the Bush plan stating that the increase of ethanol production for U.S. consumption will lead to higher food prices, and he has asked all Latin American countries to pass on ethanol and rely on the OPEC nations oil reserves.

However Brazil's president says there is a huge territory, not only in Brazil, but all South American countries, along with Africa which can produce oil seeds for biodiesel, sugar cane for ethanol and food at the same time.

Chavez is promoting the projected Union of the South American Nations or UNASUR, a working relationship for economic and political integration in South America.

"Gradually the U.S. empire will end up a paper tiger and we the peoples of Latin America will become true tigers of steel," Chavez said on the eve of the summit. 

Venezuelans Head for Florida - They call it "Plan B"

As Venezuelan President Hugo Chavez further tightens control of the South American country's economy, wealthy Venezuelans who once thought they could live with his socialist program are exercising their backup plan - Head to the U.S. - especially the State of Florida.

Wealthy Venezuelans have long been sending money to the U.S. since Chavez first took power back in 1998. They hoped that Chavez would maintain a friendly business climate - but with the government taking control of much of the business sector, along with 17% inflation, many have made a decision to permanently reside with their U.S. bank accounts.  

Florida real estate investors report that Venezuelans have long been gobbling up condos and pre-construction deals in Florida as investments, but the latest buyers want homes where they can live and business properties that will help them earn a green card.

Along with businessmen, politiciams, military and other professionals are also leaving Venezuela because they fear the effect Chzvez's socialist policies will have on the economy, along with the proposed education reforms. Those with businesses complain that you don't know if a contract you sign today will be honored by the governmet tomorrow. All reports lots of political and economic insecurity.

According to official records, since Chavez took office the number of Venezuelans has doubled here in the U.S. to a total of approximately 160,000, and most of them live in Florida. But that number may not quite be accurate. In 2005 about 400,000 Venezuelans came to the U.S. on business and tourism visas, and it's unclear just how many have stayed rather than return home.

Bottom line: Chavez's nationalization of the telecommunications, electric, and oil industry has many businessmen opting for a U.S. business visa to protect their business and profits from being nationalized. The business visa requires a minimum of $500,000 investment in a company that creates jobs in underdeveloped areas here in the U.S.

It is expected to get worse for the Venezuelans who can't leave. Recently the Venezuelan Congress gave Chavez special powers to decree laws for 18 months, and Chavez is threatening to expropriate supermarkets, stores and other businesses caught hoarding food or speculating on prices. See our recent posting on Cheap Oil & No Beans.

Those who come are welcomed with open arms in Miami, where the Cuban exile community views Chavez as the next Fidel Castro.

As of 2004, Venezuelans tied with Germans and Canadians as the second biggest group of foreigners purchasing homes in Florida, according to the National Association of Realtors. Only the British bought more Florida homes.

Venezuela is providing London with discounted diesel fuel in exchange for advice on public transportation, environmental protection, tourism, and city planning.

According to the deal Venezuela’s state-owned oil company will provide of diesel at a 20% discount. The deal will allow the city of London to provide half-price bus tickets, and benefit up to a quarter of a million of the lowest income Londoners.

Most people in London do not have the same form of heating as here in the U.S., so the most beneficial plan was for Venezuela to provide diesel fuel for London's transportation system - which is one of the largest in the world. The agreement will save the city $32 million. 

Venezuela's cheap oil programs have been criticized here in the U.S., and some in London feel that since they are one of the richest cities in the world, they should not be getting foreign aid.

On the other hand supporters say that both countries gain from the cheap oil deal with both giving away something that is relatively cheap, but for the other is quite vital and costly.

The Caribbean sister islands of Trinidad (shown at left) and Tobago close to signing accord on the giant Loran gas field with Venezuela 
 
Venezuela and Trinidad and Tobago are "very close" to signing an agreement that would give Venezuela about a 70% share of the Loran gas field straddling the two nations maritime border.

Trinidad could start to develop its 30% share "within a matter of months" once the accord is signed because it already has all the gas infrastucture in place. But it would likely take years for Venezuela to activate gas development in that country in order to build the platforms, pipelines and receiving infrastructure needed to exploit its share.

Venezuela may have an option to have its gas monetized in Trinidad if it chooses not to develop its own gas infrastructure in Venezuela. 

The two nations earlier agreed to discuss joint development of the offshore reserves straddling their boundary to help reduce costs and ensure fair and efficient exploitation of reserves.

ChevronTexaco and BG are holders of the offshore reserves that straddle Venezuela.

Source: Platts

While Chavez is offering "cheap" oil to Americans, his own people are finding cheap cuts of meat and no beans at the supermarkets in Venezuela . . . CT

A TV commercial shows former Rep. Joseph Kennedy standing aboard an oil tanker moving across the Boston skyline and promises that millions of gallons of discounted heating oil are on their way to poor, shivering families, courtesy of “our good friends in Venezuela.”

How are those oil profits working for the people of Venezuela?

Food producers and economists say Chavez new measures will generate more shortages and higher prices for consumers. The inflation rate in Venezuela climbed to an annual rate of 18.4% in January, the highest in Latin America and far above the official target of 10 to 12%.

Entering a supermarket in Venezuela is quite interesting. Shelves are fully stocked with Scotch whiskey, Argentine wines and imported cheeses like brie and Camembert, but basic staples like black beans, chicken, and desirable cuts of beef like sirloin are often absent. Customers are left with choices such as pork neck bones, rabbit and unusual cuts of lamb.

Read more in the New York Times

Concentrating Power in the Hands of a Single Man

President Bush may be having problems convincing all of Washington that he is the "decider", but Hugh Chavez has been voted powers by his Congress to do just about anything he wants to in his country

Hugo Chavez has a loyal Congress that has agreed to give him "special powers" for 18 months to transform 11 areas of the Venezuelan government including the economy, energy and defense.

Chavez, who is beginning a fresh six-year term, says the legislation will be the start of a new era of "maximum revolution" during which he will consolidate Venezuela's transformation into a socialist society.

Chavez has already said he will use the law to decree nationalizations of Venezuela's largest telecommunications company and the electricity sector, slap new taxes on the rich and impose greater state control over the oil and natural gas industries.

A final draft of the law shows Chavez will also be allowed to dictate unspecified measures to transform state institutions; reform banking, tax, insurance and financial regulations; decide on security and defense matters such as gun regulations and military organization; and "adapt" legislation to ensure "the equal distribution of wealth" as part of a new "social and economic model."

Chavez also plans to reorganize regional territories and carry out reforms aimed at bringing "power to the people" through thousands of newly formed Communal Councils, in which Venezuelans will have a say on spending an increasing flow of state money on neighborhood projects from public housing to road repaving.

His critics, however, are calling it a radical lurch toward authoritarianism by a leader with unchecked power that is unprecedented in Venezuela's nearly five decades of democratic history.

Chavez's supporters deny the law constitutes an abuse of power and argue radical steps are necessary to accelerate the creation of a more egalitarian society, and the new laws will benefit those who have been excluded their whole lives.

Chavez has requested special powers twice before.

In 1999, shortly after he was first elected, he was only able to push through two new taxes and a revision of the income tax law after facing fierce opposition in congress. In 2001, by invoking an "enabling law" for the second time, he decreed 49 laws including controversial agrarian reform measures and a law that sharply raised taxes on foreign oil companies operating in Venezuela.

This time, the law will give Chavez a free hand to bring under state control some oil and natural gas projects that are still run by private companies, the latest in a series of nationalist energy policies in Venezuela, a top oil supplier to the United States and home to South America's largest gas reserves.

Chavez has said oil companies upgrading heavy oil in the Orinoco River basin (British Petroleum PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Total SA and Statoil ASA) must submit to state-controlled joint ventures, as companies have already done elsewhere in the country.

The law gives Chavez the authority to intervene and "regulate" the transition to joint ventures if companies do not adapt to the new framework within an unspecified "peremptory period."

The response from Washington . . .