Houston oil firm dragged down by giant octopus of Venezuelan corruption
A Houston oil company, Harvest Natural Resources, Inc., is suing Venezuelan Chavista stalwart Rafael Ramirez, who served as the communist regime's oil minister for a spell, on the grounds that his shakedowns forced them to lose $470 million from sales of their assets.
According to Bloomberg:
Harvest Natural Resources Inc. said that because it rebuffed four separate $10 million bribe demands from associates of Ramirez, Venezuela's power ministry withheld approval for Harvest to sell its energy assets in the South American nation. That resulted in losses of $470 million, according to a complaint filed Friday in Houston federal court.
So it's come to this in socialist Venezuela: a bubbling pit of corruption that had been great for foreign investors to do business in so long as the gravy lasted that has now fallen upon hard times now that oil prices have fallen and night has descended.
It turns out that the bubbling swamp of Venezuelan black gold was a nice thing for Harvest and a few other foreign investors, bringing in profits for themselves and money for the socialist government even as the country fell into shambles and the book on democracy and rule of law closed. Crime spun out of control, the infrastructure rotted, food and medical shortages abounded, the judiciary was corrupted, and the central bank was suborned, but Harvest stayed right there as an investor in the industry, its public face suggesting that none of this was material to producing oil. A few larger oil companies, such as ExxonMobil, did pull out, and then commenced lawsuits as well, but there were also companies like Harvest that kept on trucking, confident they would be able to, in time, turn a profit. The problem was that their money financed the regime enough to fuel its rampage against democracy even longer than it might have lasted otherwise, and as it went on, it wrecked the country even more severely.
I'm not utterly unsympathetic to the plight of Harvest. Smaller oil companies such as Harvest struggle to get drillable real estate, given that the majors have already taken the best spots, and naturally, that leaves them with choices of only gamier players such as Venezuela. Since the Chavista regime and all its minions really are so despicable, I hope they do win their lawsuit against the sumptuously corrupt Ramirez, too.
But there still is a problem with anyone whose investment finances a regime as totalitarian-minded as Venezuela's. Look at this news over the years regarding Harvest's nice things said pertaining to Venezuela.
Here they were in 2004 on the heels of a huge oil strike brought on by Venezuelan socialist strongman Hugo Chávez's decision to crush a legal strike over whether the oil company would be run by political players or professionals. The Houston Chronicle reports:
But the work stoppage didn't sour the independent company on investing in the South American country that is rich in oil.
Instead, company executives plan to continue focusing on oil and gas exploration and development in Venezuela and to search for opportunities in Russia.
That strike and the thuggish Chavista way in which it was ended didn't suggest to Harvest that Venezuela's democracy was going south? The company should have pulled out right there to support the Democrats and protect its shareholders from losses.
It kept investing in 2007, around the time two more fraudulent elections had been held, a major television station had been shut down, and protests engulfed the streets.
According to Finanzen.net:
Harvest Natural Resources, Inc. today announced that the Venezuelan Ministry of Energy and Petroleum (MENPET) has published a resolution which defines the coordinates of the six fields to be transferred to the mixed company, Petrodelta, S.A. (Petrodelta). Harvest Vinccler S.C.A. (HVSCA), an 80-percent-owned Harvest affiliate, will contribute its Uracoa, Tucupita and Bombal field rights to Petrodelta. HVSCA has operated and developed these fields since 1992. In June, the Venezuela National Assembly approved the direct award of the Isleno, Temblador and El Salto fields to Petrodelta.
And then there was this, in 2015, from Oil & Gas Investor:
Harvest Natural Resources entered a partnership with CT Energy Holding SRL and CT Energia Holding Ltd. to maximize the long-term success and value of Harvest's Venezuelan operations and its investment in Petrodelta SA, Harvest said June 19. CT Energy Holding SRL is an Italian-Venezuelan consortium.
Houston-based Harvest entered into a term sheet with Venezuela's state-owned PDVSA, its partner in Petrodelta, to reposition Petrodelta's business. Harvest has a 20.4% investment in Petrodelta.
Venezuela-focused? While they were being shaken down for $10 million in bribes by Ramirez? Such great P.R. for the Chavista regime, signaling to everyone that the water was warm and it was safe to jump in. Turns out a tentacle was anchored to their leg and starting to pull them down.
Now the story comes out about the lawsuit and having been shaken down by Ramirez just for trying to sell its assets and leave the country. Communist regimes have always exacted massive exit fees for those voting with their feet, just as any Cuban immigrant leaving at the dawn of the Castro era, being forced to give up his wedding rings and family jewelry at the airports for the "privilege" of leaving the country. These people should have known this before they invested.
And more to the point, they should have loudly called the bribes from Ramirez as the company was being shaken down. They should have hired some of Chevron's private detectives, the ones who exposed the great Ecuador oil fraud, and taped Ramirez as he made his creepy little demands for moolah in the tens of millions.
They must have thought they could win more otherwise. And Ramirez caused them to lose millions as they resisted. But the worst thing here is that they invested in the gamy regime at all, their taxes continuously funding the socialist government, enabling it to shake not only them down in its power, but also the entire country and leave it a failed state. They fed the crocodile in the swamp, hoping it would eat them last, and sure enough, it came by to eat.