ENI color you want, so long as it's green

PDVSA en Flames

Finally, some truly juicy bits about Venezuela are coming out of the Wikileaks cables. What’s coming out, though, is not exactly what Eva Golinger fantasized about when she first heard of the mega-leak.

Take it away, Rory Carroll:

Venezuela’s tottering economy is forcing Hugo Chávez to make deals with foreign corporations to save his socialist revolution from going broke.

Italy’s ambassador to Caracas, Luigi Maccotta, told his US counterpart that Italian oil company ENI squeezed PDVSA over an Orinoco belt deal in January this year knowing it had no one else to turn to.

The Italians delayed the signing by two days to reinforce the Venezuelan government’s “need for ENI”. Paolo Scaroni, the company’s CEO, then faced down Venezuela’s oil minister, Rafael Ramirez, over changes to terms and conditions.

“Thirty minutes before the ceremony was supposed to begin Scaroni told Ramirez: ‘Take it or leave it, I can get on my plane and move on.’ Ramirez apparently used that half an hour to convince President Chávez to accept all of ENI’s proposed changes or risk losing the deal,” according to the US cable. The Italians said they would not pay PDVSA a standard signing bonus because the company already owed them $1bn.

Venezuela’s oil minister, who is the head of PDVSA, travelled to Moscow and Beijing hoping for solidarity deals with allies, only to find the Russians and Chinese as profit-minded as western companies.

Do yourself a favor and read the whole thing.

Addendum: Drilling down on the Energy-related cables Rory links to, one big theme that comes out is that the major bottleneck in PDVSA these days has to do with Natural Gas: there’s just not enough of it being produced to re-inject into oil wells to keep their pressure up, largely because PDVSA’s insistence on keeping prices artificially low leaves foreign majors with virtually no incentive to invest in the sector.

The way PDVSA’s handled the Gas shortage is, to say the least, interesting. In one of the embassy cables, we find this absolute pearl:

According to XXXXXXXXXXXX [a Mitsubishi official], Vice Minister for Petrochemicals (and PDVSA Vice President for Refining, Trade, and Supply) Asdrubal Chávez [Note: Hugo’s cousin -ft] reportedly told another Japanese firm recently that any natural gas supply deal signed before he assumed his current position at the Ministry is invalid and that it was not in PDVSA’s interests.

Read it twice. Let the implications really sink in.

Holy. Cow!!!