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June 1, 2006 By Fausta

Vene zuela’s new Iranian refinery

Iran and Venezuela Will Build an Oil Refinery, IRNA Reports

Iran and Venezuela will jointly build an oil refinery in the Venezuelan region of Faja region, the Iranian state news agency IRNA reported today, without saying where it got the information.

Venezuela’s presently hosting the OPEC meeting, where Hugo wants the cartel to cut production. Since the participating countries don’t want that, now Venezuela is looking to certify an estimated 30 billion barrels of new heavy oil reserves early next year, a move that would help increase its profile within the Organization of Petroleum Exporting Countries.

According to this article,

While the government denies it and high oil prices mask it, analysts say Venezuelan oil production is declining. Since Chávez took over in 1999, production in the state-run oil fields has fallen almost 50 percent,
. . .
During the same period, no new significant oil reserves have been discovered. And with new, smaller profit margins for outside companies, foreign investors are now slowing the rate of investment in the jointly run oil and gas fields.

While Venezuelan oil production has decreased Venezuela signed an agreement for refining of up to 100,000 barrels of Ecuador’s crude oil a day. After all the hype died down, Ecuador has made it clear that

“If Venezuela’s offer does not suit the country then nothing will happen, even with an agreement and a memorandum of understanding,”

so the ink hasn’t dried on that yet. Since Ecuador wants to join OPEC, they might be waiting for a better deal than Venezuela’s. Hugo has in the works natural gas deals with Algeria and Qatar, but the only reliable deal so far is with Bolivia.

Hugo’s in a bind:

  • He wants Venezuela to carry more weight in OPEC. For that, Venezuela needs more oil. While he tries to find more oil reserves, he’s looking into a natural-gas version of OPEC
  • Carrying out the Bolivarian Revolution is very very expensive
  • Venezuelan oil refineries have been having problems for years now, icluding at least 10 shut-downs during the course of 2005, probably for lack of maintenance (Update, June 3: Read this for more on Venezuelan Crude)
  • Venezuela signed agreements with China to boost sales of gas and oil to the world’s second-largest energy consumer after the U.S just this January

The mullahs are in an analogous situation, with Plenty of Oil, but Few Refineries for Iran (see also the poorly translated Under mullahs’ management, few refineries left in Iran). Facing possible UN sanctions, Iran now looks to build a refinery overseas, in Hugoland, a match made from the devil’s excrement.

Hugo’s still getting armed to the teeth, and after buying 100,000 Kalashnikov AK-103 assault rifles — of which the first 36,000 will arrive this week — he decided to build a factory for them, plus a munitions factory. In coarse language, this means screw the weapons ban, while saving on shipping. The Russians prefer to keep their cards closer to their chests,

The Russian state’s official arms exporter, Rosoboron-export confirmed that talks were taking place with the Venezuelan government, but would not give details about the factories’ production capacity or when they would be built.

For all we know, the factories will be built after Oliver makes the movie, or maybe they’ll build some fighter jets, too. Red State has more on the subject. (Update Check out Elephants in Academia’s post on Potential ramifications of the Venezuelan military build up)

The way I see it, Hugo’s increasingly relying on foreign governments. And those foreign governments won’t be having Venezuela’s well-being foremost in their minds. They’ll make their move when it suits them. In that sense, they have much in common with Hugo.

As for internal doings in Venezuela, things are really getting worse, children are starving (via The Devil’s Excrement), and the scandals continue.

For now, Hugo holds center stage, and OPEC is discussing changing from traiding in dollars to trading in euros, which will have a negative effect in the US economy, which suits Iran and Venezuela just fine.

Update If the proposed refinery does get built, it’ll be, as Pajamas Media put it, something the United States hasn’t done in thirty years.

Update 2 OPEC rejects Venezuelan call to cut output
. Read Publius Pundit‘s entire post. Here’s a teaser:

Hugo Chavez, by contrast, has a philosophy of spend and waste his country’s resources, the better to amass political power all through the hemisphere. Never mind investing, take the oil and run – once the hemisphere becomes Cuba, no one’s gonna need oil anyway.

And Ahmadinejad might want to bring the 12th Iman, after which no one’s gonna need oil anyway either. The OPEC guys sure don’t relish the idea, though.

(technorati tags Iran, Venezuela, OPEC)

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