What hurts Venezuela may help Exxon
Mar 29th 2009 7:05AM
Updated Dec 3rd 2009 10:25AM
The AP makes a good case that, because oil rich nations need capital due to the low price of crude, large oil companies may have leverage to get contracts that give them better deals for drilling and refining. The news agency writes, "Experts say Western oil corporations, who stockpiled cash when profits were flush, can shift operations to any corner of the globe and have the capital that allows them to strike deals with state-controlled producers on very favorable terms."
For oil companies liike Exxon (XOM), it would be a sort of revenge on nations like Venezuela that nationalized many of the assets of the world's largest crude exploration and refining companies. Hugo Chavez, Venezuela's "president for life" will need Western investment if the price of crude stays below $50.
But, revenge can come again. If the price of oil moves back toward $100, and it will at some point as supplies drop over the years and the global economy recovers, Chavez will once again have the leverage to make oil companies with assets in his country operate on his terms.
Douglas A. McIntyre is an editor at 24/7 Wall St.