Chavez Threatens Second TV Shutdown

Chavez Threatens Second TV Shutdown as Protests Mount
By Guillermo Parra-Bernal and Alex Kennedy
May 29 (Bloomberg)

Chavez said he had ``no fear'' of criticism he might face for closing Globovision, a 24-hour news channel that he accused of trying to instigate his assassination. The threat follows the May 27 shutdown of Radio Caracas Television, Venezuela's most- watched TV network.

Venezuelan President Hugo Chavez threatened to shut down the country's last opposition television station as students took to the streets for a third day, protesting what they say is a crackdown on free speech.

``They're trying to light the streets on fire and justify violence,'' Chavez said in a speech to supporters televised from Vargas state. ``I call on the people in the slums to be alert to defend the revolution.''

The three days of disorder in Caracas and other major cities marks the longest stretch of anti-Chavez demonstrations since March 2004, when opposition-led protests demanding a recall referendum left nine dead. Clashes across Venezuela between the police and marchers injured at least 40 yesterday, Globovision reported.

The yield on the 2019 government bond, known as TICC, jumped 4 basis points to 4.86 percent, the highest since March 26, according to Econoinvest Casa de Bolsa CA prices. The price dropped 0.4 to 103.50 cents on the dollar at 5 p.m. New York time.

The cost of buying protection on $10 million of Venezuela's bonds for five years had its biggest jump since Jan. 9, surging 17 percent to $198,000, according Credit Market Analysis. Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on the ability of countries or companies to repay debt. An increase in price suggests deterioration in credit quality.

University students gathered in eastern Caracas while Chavez supporters rallied downtown to support the government's refusal to renew the license of RCTV, as the country's oldest broadcaster was known.

Communications and Information Minister William Lara added pressure on non-state television outlets yesterday, asking for an attorney-general's probe of Globovision Tele CA and Time Warner Inc.'s Cable Network News for allegedly inciting violence. Globovision, founded in 1994, is owned by an investor group called Corporacion GV Inversiones CA.

RCTV, which had a national distribution, and Globovision, available only in Caracas and Carabobo state, were the only prominent stations critical of the government. xxx Coup xxx In an interview yesterday, Globovision General Manager Alberto Federico Ravell called the accusations ``ridiculous.''

``Chavez has just gone too far this time,'' Ruben Briceno, 22, a Central University of Venezuela student majoring in social work, said in an interview. ``First it was the shutdown of Radio Caracas. What will come next?''

Chavez said today the students are being manipulated by people he didn't cite. National Assembly Vice President Roberto Hernandez said the protests are organized by opposition parties seeking to overthrow Chavez.

``They will not succeed in weakening this government,'' Hernandez told reporters in Caracas Interior and Justice Minister Pedro Carreno said state intelligence and police services were prepared to quell any effort to destabilize the county.

In the days leading up to the RCTV shutdown, Chavez said the company's executives had used the network to help incite a coup that ousted him from office for two days in 2002. While RCTV covered his ouster without interruption, it failed to report his government's return to power and ran cartoon shows.

During the coup and strike, the four biggest private stations -- RCTV, Venevision, Televen and Globovision -- ran commercials calling for Chavez to resign, said Daniel Hellinger a professor of political science at Webster University in St. Louis and author of several books about Chavez. ``They say I'm a tyrant,'' Chavez said today. ``Who accuses me? Serpents.''

Globovision television station showed students putting up barricades on the streets of El Junquito, a town about 20 kilometers (12 miles) east of Caracas. Another group blocked traffic for a time on the Prados del Este highway in Caracas, creating logjams, it said.

Groups of RCTV supporters held a demonstration in front of the Organization of American States' local offices. The police deployed 4,000 officers to protect the surroundings of the OAS offices.

RCTV's shutdown, coupled with the probes of CNN and Globovision, will intensify international scrutiny of free speech in Venezuela, Miguel Henrique Otero, editor-president of Caracas-based El Nacional, the nation's second-most read newspaper, said in an interview yesterday.

``Press relations with governments with authoritarian inclinations are always difficult,'' said Paul Knox, chair of school of journalism at Ryerson University in Toronto. ``At this point, it's fair to say that the Chavez government has an authoritarian inclination.''

Nationalizing the Orinoco

By Michael J. Economides and Xiomara Sangronis

Mar. 09, 2007

The Orinoco Belt, one of Venezuela’s richest deposits of heavy oil, will soon be under the complete control of PDVSA. On January 10, at a speech before the National Assembly, Venezuelan president Hugo Chávez said that the Orinoco oil projects should switch to state hands. He also announced that the Venezuelan government will take control of the Orinoco fields (currently operated by companies from the U.S., France, Norway, and the U.K.) by May 1.

“We want to negotiate…but I have given instructions that on May first when the sun gets up, we will have all those oil fields under our control,” said Chávez in a subsequent press conference. “If someone does not agree, he has the right to go away…but we are going to respect their rights,” he said.

He went on to say that the companies “will accept this because we are going to continue being partners.” The outside companies will be allowed to invest as minority partners on joint ventures. “The company that wants to stay as our partner, we left the possibility open to them. The one that does not want to stay as minority partner, return the oil field and goodbye…good luck, thank you very much,” he said. Chávez also claimed that the process would allow “PDVSA, and therefore the nation,” to save some $6 billion.

The Orinoco Belt covers some 55,000 square kilometers and contains up to 1.3 trillion barrels of extra-heavy crude with an expected recovery of about 20 percent. If that rate is realized, an international certification of the Orinoco’s reserves, expected next year, could place Venezuela either equal to or surpassing Saudi Arabia with its 264 billion
barrels of reserves. Production in the Orinoco is currently about 566,000 barrels per day of crude with an API gravity of 9. That oil is then upgraded to a much lighter 34 degrees API by heating and hydrogen injection. This is done at the petrochemical complex in Jose, about 250 kilometers east of Caracas.

At present, there are four major projects underway in the Orinoco, all of which are called “associations.”

- Sincor: Total, 47 percent, Statoil, 15 percent, and PDVSA, 38 percent.

- Petrozuata: ConocoPhillips, 50.1 percent, and PDVSA, 49.9 percent.

- Ameriven: ConocoPhillips, 40 percent, Chevron, 30 percent, and PDVSA, 30 percent.

- Cerro Negro: PDVSA, 41.67 percent, Exxon Mobil, 41.67 percent, and BP, 16.67 percent.

Rafael Ramírez, Venezuela’s energy minister, recently said that since he has been negotiating with the international companies for months, the nationalization should not be a “surprise for anybody.” Given that history, he said there is “no possible negotiation whatsoever. Nationalization will be implemented under a law, the draft of which has been completed.” PDVSA, through its affiliate Venezuelan Petroleum Corporation, will also gain control of the oil firms involved in upgrading the Orinoco’s crude. Ramírez explained that the government’s goal is to standardize the upgrading operations and gain the means to better implement “governmental decisions, such as output cuts under OPEC.”

Although the Venezuelan oil industry was originally nationalized in the 1970s, Ramírez claimed that the move regarding the Orinoco was no more than a further nationalization because, in the past, neither the country’s constitution, nor the laws governing hydrocarbons, specifically defined control over the region.

The move by Chávez to take over the Orinoco was greeted with skepticism from the U.S. government. “This is a disturbing trend, far from the principles of transparency and open markets,” said Craig Stevens, a spokesman for the U.S. Department of Energy. Stevens said the move will be “to the detriment of the Venezuelan people, the long-term development of the country’s national resources, and ultimately, economic
growth.”

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