Oil is the mainstay of Venezuelan President Hugo Chavez, who is using its currently high prices to sweeten the implementation of his own new world order.
For some people, that can mean a very a sweet deal indeed. Consider Venezuela’s chocolate industry. Until the advent of the country’s oil industry in the last century, the cocoa bean was Venezuela’s main export.
Now, it seems, Chavez plans to use booming oil revenue to bring back the golden era of Venezuelan chocolate production, as evidenced by an 8-hectare cocoa bean plantation and factory on the Paria Peninsula, on Venezuela’s eastern coast.
The owner of the factory borrowed money from the Banco Industrial de Venezuela, a government-controlled bank, to buy the necessary grinding and molding equipment for the plant, which can produce up to 100 tonnes/year.
Flowery aroma
In September, the factory sent off its first exports to Belgium, where it will likely be well received. Thiery Muret, master chocolatier at Godiva, the Belgium-based premium chocolate maker, claims the quality of Venezuelan beans is unparalleled.
“It’s the flavor delivery,” he said. “When you taste chocolate made with Venezuelan origin beans, you have a much more combined flavor. It has a flowery aroma, like violets.”
Others want in on this sweet deal, and the Venezuelan government appears ready to oblige them in entering the world cocoa market, said to be worth around $5 billion/year.
Indeed, to move things along, Chavez recently announced a $2 million investment to reopen a derelict chocolate factory in the town of Cumana.
The oil revenues funding this development have come largely through the efforts of private enterprise. In the 1990s, state-owned Petroleos de Venezuela SA (PDVSA) entered 32 operating service agreements with 22 oil companies for Venezuelan exploration and production. To encourage development, PDVSA even gave companies preferential tax rates-a sweet deal at the time.
Sweet to sour
But all that is going sour. Last week, Venezuelan Oil Minister Rafael Ramirez announced that the government may assume up to an 80% stake in oil fields where crude had been produced independently by foreign companies.
By January, under a plan announced last April, Venezuela hopes to have converted all operating agreements with foreign companies into temporary oil contracts, a step toward final joint venture agreements with PDVSA.
If companies refuse to accept the conversion of their contracts by the end of the year, Venezuela could take over their production operations, said Ramirez, who also heads PDVSA.
“There will be no more operating agreements ever again,” Ramirez said. “We would take over production with our own resources” if companies refused to change the contracts, he said.
Such talk is likely to kill the goose that lays the chocolate egg.✦
