Venezuelan President Hugo Chavez recently stopped in Portugal and offered to become a main supplier of oil and gas to the small Iberian Peninsula nation.
“Venezuela wants to be a secure source of energy for Portugal,” said Chavez. “This is about expanding our strategic range, our presence in the world, in a country like Portugal that we hold in high esteem,” he gushed.
Portuguese oil and gas company Galp Energia SGPS SA was not shy in saying it plans to buy as much as 2 billion cu m of LNG from Venezuela. The Portuguese firm said it might even help build a liquefaction plant in the South American nation.
That was back on Nov. 20 and, given ancient rivalries, it sounded a bit odd for Spanish-speaking Venezuela to make such offers in, well, Portuguese-speaking Portugal.
One simply could not help thinking that Brazil—currently Venezuela’s arch-rival in Latin America—was somehow the target of this visit by Chavez.
Modern rivalry
After all, Chavez provoked the ire of Brazilian lawmakers on two separate occasions earlier this year when he said Brazil’s congress was “submissive” to US interests.
Could Chavez be trying to upstage his rival in Brazil, President Luiz Inacio Lula da Silva, by wooing Portuguese oil and gas investors?
Just before Chavez’s visit, directors of Brazil’s state-owned Petroleo Brasileiro SA told Lula that the country’s ultradeep presalt layer could contain up to 80 billion bbl in oil reserves.
Brazil will need help getting the oil. Its presalt area lies in more than 2,000 m of water, and further beneath 3,000 m of sand and rocks below the ocean floor, as well as a 2,000-m thick salt layer.
Getting the oil is highly worthwhile: Petrobras Chief Executive Sergio Gabrielli said Tupi field would put Brazil’s reserves somewhere between those of Nigeria and Venezuela. Oops!
Portuguese investment
Petrobras has a 65% operating stake in the Tupi field, BG Group PLC holds another 25%, and—guess who?—Portugal’s Galp Energia has rights to the remaining 10%.
In a word, Galp Energia has access to a lot of Brazilian oil as well as the kind of capital Brazil’s development program needs. Would that gall a man of Chavez’s sensibilities? Will the sun rise in the East tomorrow?
As we know, Chavez views his oil as a political weapon—something to be dangled before potential allies or withheld from supposed enemies.
Chavez already considers his country to be a main source of oil and gas to much of the world’s underprivileged, whether they live in the US, the UK, the Caribbean, or Latin America.
So, word of Brazil’s new potential power as major producer of oil and gas might not be welcome news to his ears. It could undermine his self-proclaimed rule in the region and around the world.
Hence, his visit to Portugal and his wooing of that nation’s not inconsiderable oil and gas investment money.
