Although it's said the burned hand learns best, that doesn't seem to be the case with Big Oil. It was only two years ago that Venezuela's president Hugo Chavez drove ExxonMobil
Now with oil having plummeted 70% from its peak, it seems Chavez wants the Yankee dogs back. He's offering stakes in joint ventures again and, surprisingly, 19 oil companies including StatoilHydro
Yet as easy at it might be to say that falling oil prices are causing Chavez to beg for the imperialists to bail him out, it ignores the fact that most companies never really left. When Chavez began his nationalization policy, companies like Chevron
Those who forget history ...
No doubt lower oil prices put the oil companies in better bargaining positions with Chavez -- after all, Venezuela counts 93% of its export revenues as coming from oil -- and Petroleos de Venezuela (PDVSA), the national oil company, seems to be a dysfunctional operation. While the official statement has been that PDVSA has been pumping out some 3.3 million a day, OPEC says it's more like 2.4 million. Moreover, the extra heavy crude common in the Orinoco basin is not as commercially attractive at lower oil prices, meaning the payoff for getting back in wouldn't be immediate.
Yet these developments were in play before Chavez ran the oil companies out of town and there's no indication he's offering anything other than the minority interests he was previously allowing. There might be slightly more urgency for Chavez to prop up his faltering political agenda by extending an olive branch, but the oil companies have been propping him up for years, turning a blind eye so long as they made a profit.
... are doomed to repeat it
The bigger question is whether they will willingly step back into the lion's den knowing full well that if oil prices soar again, the mercurial dictator will likely change his mind once again. You'd think BP or Royal Dutch Shell, for instance, would be especially hesitant about cozying up to the strongman again. After all, BP saw one of its executives flee Russia to escape trumped up charges while having a power-sharing agreement forced on it. Shell was forced to sell its Sakhalin Island interests to Russian gas giant Gazprom. Such are the dangers of signing over your soul to the devil.
But oil companies typically have a long-term mind-set and may indeed be looking ahead toward the day when Chavez or Putin and his cronies are no longer in power. In the meantime, should Big Oil accept Venezuela's overtures, they ought to go in eyes wide open … and wear oven mitts.