Theft by engraved invitation — VOICES for REASON

How much sympathy would you feel for the victim of a theft if he parked his car in a high crime area, left his keys in the ignition with the motor running, and walked away without looking back? The analogy is not exact, but it captures something important about oil companies and the recurring nationalization of their assets overseas.

Case in point: It seems that nineteen companies have shelled out $2 million each to buy data on petroleum-rich areas that may soon be opened up for exploration–in Venezuela.

Yes, Venezuela–the socialist nation that asserts ownership of the vast petroleum reserves known to lie in the Orinoco Belt, despite having no idea how to get the oil out of the ground.

Venezuela, the government that in 2007 blithely nationalized vast oil facilities that had been built and operated by ExxonMobil, ConocoPhillips, and other western companies.

Venezuela, whose daily production has fallen in the last 10 years from 3.4 million barrels down to 2.3 million as joint ventures with countries like Iran, China, and Belarus have failed to match the results achieved by Western enterprises.

According to the International Herald Tribune, President Hugo Chavez is “quietly courting Western oil companies once again.”

Until recently, Chavez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases.

But faced with the plunge in prices and a decline in domestic production, senior officials here have begun soliciting bids from some of the largest Western oil companies in recent weeks–including Chevron, Royal Dutch/Shell and Total of France–promising them access to some of the world’s largest petroleum reserves, according to energy executives and industry consultants here.

Their willingness to even consider investing in Venezuela reflects the scarcity of projects open to foreign companies in other top oil nations, particularly in the Middle East.

It reflects something else as well–some corporate blind spot that leads them to invite new abuse before the wounds have healed from past beatings. Oil companies that enter into “contracts” with Venezuela can be sure the government will violate them in time–its anti-capitalist ideology both justifies and demands it. Then the vicious cycle of expropriation and forgiveness will begin anew.

Nationalization is theft, but few companies are willing to conduct themselves accordingly. More oil executives should be reading Atlas Shrugged and pondering how to apply its lessons to their industry.