running an oil field for the long term is not actually all that easy. it is a remarkably technical skill, and the big oil companies have done a godo job in snapping up most of the talent. countries that have nationalised oil fields have seen a drop in production (like, cough cough, Venezuela) see also: Libya, Iraq, Iran.

how is it that Venezuela, with the 6th largest crude deposits in the world (the largest, if you include the more expensive to handle ultraheavy crude deposits; following Saudi Arabia, Iran, Russia, Indonesia, Qatar) has seen dropping production under since the nationalisation of oil field production has commenced? Look at the countries with nationalised oil on that list: Indonesia, Qatar, Iran, Russia) all underperform in terms of oil production (Saudi Arabia is an interesting case, the fields are nationalised, but run by the joint venture ARAMCO to good effect) ten years ago, PdVSA was well run, and investment in oil and gas production was high. now it is run by cronies (guess who runs the shipping arm of PdVSA? Chavez's cousin. surely well qualified. and the sales division? his brother. quite a talented family)

and who, pray tell, will be running the Cerro Negro without the companies who built it and the infrastructure to refine it? Anecdotally, PdVSA is offering new contracts to the skilled workers in the field at 50%-75% pay cuts. And that's the local talent, which, anecdotally, is in high demand in places like the oil sands of Alberta. would you take a 75% pay cut if someone else was offering you a raise? Did you know that Venezuela imports gasoline? why? because 75% of the refining capacity for the strangely heavy crude from the Orinoco Belt is in Texas and Louisiana. It will take tens of billions of dollars of investment to regain the production of the multi-nationals. Chavez does have a company waiting in the wings to take over from the Western ones, if need be, China National Petroleum Corporation (CNPC). Of course, CNPC has something in common with George Bush, they can't find oil in an oil field. Their current contracts in Venezuela have not panned out, in 1997 they signed a deal to increase production in the Caracoles region, with proven reserves of 210+ million barrels. So far, they have increased production from 14,000 bbls to 21,000 bbls (per day) despite a plan to produce 50,000 bbls/day by 2002. and PdVSA's latest investment? a multi-billion dollar gas pipeline to Brazil. only problem? Brazil doesn't use much natural gas, and is, in fact, basically energy independant. Oil fields are capital intensive operations, both financial capital and human capital, Chavez is driving both away. National oil companies do a remarkably bad job at managing resources unless there is serious independance from the national government, which isn't the case here. This is a bad move for Venezuela. Yes, they are making a lot of money, given the high prices of oil, but they could be making so much more.