African nations should nationalize oil: Venezuela

DAKAR (Reuters) - African nations should follow Venezuela's lead and nationalize their energy and mining sectors to secure the resources to fight poverty, Venezuela's deputy foreign minister for Africa said on Friday.

Reinaldo Bolivar, on a visit to Senegal, said his oil-rich South American nation would host a summit of African and South American nations in November to discuss cooperation ranging from energy to banking between the two regions.

African nations, which produce 15 percent of the world's oil, could learn from aspects of Venezuelan President Hugo Chavez's nine-year-old leftist revolution, Bolivar said.

"Africa's oil is plundered by multinationals: they sell it very expensively even here," he told a news conference. "African countries produce 10 million barrels of oil a day and they could supply their own market if they only united."

Bolivar said OPEC-member Venezuela, which produces some 2.5 million barrels a day of oil, was using its own resources to fight poverty following the re-nationalization of the sector in 2007. The move has led to an acrimonious legal battle with U.S. oil giant ExxonMobil.

Nigeria, sub-Saharan Africa's largest oil exporter, is dogged by power shortages and reliant on gasoline imports despite producing more than 2 million barrels of oil a day. Africa supplies nearly a fifth of U.S. oil imports.

"There are some things for (African countries) to learn: the principal of nationalization of our basic industries, our natural resources in Venezuela, is something we consider necessary for our riches to benefit the people," he said. "Africa's oil should be for Africa."

Chavez's government, which has enjoyed enormous popularity with Venezuela's poor majority for its high social spending, has struggled in recent months due to shortages of basic goods and high inflation.

It has faced difficulties maintaining momentum after losing a referendum last year to speed up socialist reforms.

While resources nationalism has swept the globe from Russia to Bolivia, with state oil companies tightening their grip on oil and minerals resources in recent years, sub-Saharan Africa has lagged behind because state companies such as Nigeria's NNPC or Angola's Sonangol lack technological know-how, experts say.

November's summit in Venezuela would discuss the expansion of Chavez's proposed South American multinational state oil company, Petrosur, to incorporate some African partners. Analysts have viewed the stalled project with skepticism.

It would also propose cooperation on education, with a university for developing nations, and the expansion into Africa of the state-owned Telesur media group operating in some South American countries. Libya, Algeria, Mali, Guinea-Bissau and Gambia had all expressed interest, Bolivar said.

"Now CNN cannot tell us what to say. We have created our own network and we want Africa to take part," Bolivar said. "We are breaking the bonds of slavery."

(For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com/)

He is so full of it. He depends upon the fact that most people don’t know how oil works.

The oil companies don’t own the oil. Typically, they buy a concession, in a competitive bid, that allows them the right to put up all the investment capital, to drill and develop a field. They are allowed to recover their investment plus a profit during the first x years of the concession, while paying the host government a royalty on every barrel of oil produced, plus typically income taxes on top of that. At the end of the concession, the field is returned to the host government who can then either operate it themselves, or put it out for bid again.

The fact that the oil companies, who don’t own any oil, get rich while the countries that own the oil are often socialist hell-holes and economic basket cases, this looks like voo-doo to most people. The oil companies are in the picture because the cost of developing a field is enormous, and most of these countries don’t have the cash, and for obvious reasons don’t have very good credit. Even oil producers like Venezuela needed foreign capital to get their heavy oil production off the ground, not to mention the technical expertise.

Chavez didn’t nationalize these operations until they were up and running, you’ll notice. Prior to that time, he kept assuring the oil companies that they were safe, that his fire-eating rhetoric didn’t actually apply to them. So they kept building pipelines and process facilities up until the moment he dropped the hammer on them.

The oil business isn’t for the faint of heart. You are dealing with countries who aren’t the most reliable partners in the world, and if they decide to eat your lunch, you are on your own. The US government isn’t going to invade them for you. The most you can do is get the World Bank to refuse them credit for future projects.

LOL! This should be good. We could place odds on who will win the graft, corruption and fraud battle about to take place between South America and Africa.

Once Hugo nationalizd most of Venezuela’s oil, he fired the people who knew how to run the business and put his cronies in charge. Now Venezulea’s oil industry is falling into disrepair and production is plummeting. The mutli nationals will laugh at Hugo when he comes crying for their help to rebuild what he destroyed. Same thing is happening in Mexico, the gov’t won’t let multi nationals take a larger part of operations, and locals don’t have resources to develop new fields.

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