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Scots winning through in Venezuela

Scots winning through in Venezuela
Just over a year ago, Venezuela's then minister for Europe, Rodrigo Chaves, visited Scotland and suggested to me that it would be appropriate to have a stronger direct link between our two nations.

Just over a year ago, Venezuela’s then minister for Europe, Rodrigo Chaves, visited Scotland and suggested to me that it would be appropriate to have a stronger direct link between our two nations.

This would reflect the fact that the two dominant economic connections between the UK and Venezuela – oil and whisky – are very distinctively Scottish in character. Good idea, I agreed.

Since I first visited Venezuela as UK energy minister some years ago, I have remained intrigued by its seminal role in political transition throughout Latin America.

While the Americans were busy in more distant parts of the world, their crucial oil supplier from what Washington has always regarded as its own backyard had not only swung heavily to the left, but had also inspired much of the continent to do the same – including countries such as Bolivia and Ecuador with important oil&gas sectors.

Anyone who has visited Venezuela will find no difficulty in understanding why it eventually voted for radical transformation. This is a country that has had oil wealth for more than 80 years, yet there is far too little to show for it.

It is not necessary to subscribe to all of the rhetoric and actions that have accompanied political reform in Venezuela over the past decade in order to empathise, as I certainly do, with the basic objective of using that wealth to attack poverty.

Venezuela is the UK’s third biggest trade partner in Latin America, behind Brazil and Mexico. But if the Scottish statistics were computed separately, the relationship would be even stronger.

Apart from anything else, Venezuela (population just 26million) is the world’s fifth biggest market for Scotch whisky. They can’t get enough of the stuff. Add this to the belief that Venezuela could produce three million barrels of oil per day for the next century and it is not difficult to see why, from the economic standpoint alone, it makes sense to recognise our mutual interests through a bit more friendship and understanding.

Against that background, work has proceeded over the past year on establishing a Scottish-Venezuelan Society, which I chair, and in June, that role took me to Maracaibo and the Latin American Petroleum Show where, as in any oil city of the world, the Scots were present in numbers.

In particular, the Wood Group has a massive presence in Venezuela, which was, indeed, the first foreign outpost of its empire and where the company is highly respected as a key strategic partner in major projects.

Venezuela does not get a great press, which is part of why it wants to establish a more diverse range of links within states whose governments – like our own – are generally supportive of US foreign policy.

Washington might not like Chavez or his rhetoric, but Britain has no obligation to fall meekly into line behind a black and white view. And, equally, given our very distinctive interests in Venezuela, there is no reason why Scotland should not have its own distinctive, informal relationship.

Our interests are very much in maintaining good and constructive communications, not least in the oil&gas sector. Venezuela is about to develop an offshore industry for the first time and the opportunities for companies that have North Sea experience will be significant.

We also have an excellent British embassy in Caracas that is anxious to promote this expanding market to companies back home and to allay some of the concerns generated by the headlines about Chavez and his interventionist policies.

As usual, the story on the ground is much more complex than the headlines would suggest. In the face of tax reforms and enforced partnerships with the state oil company, PDVSA, two of the oil majors – ExxonMobil and ConocoPhillips – chose to walk away.

ExxonMobil pursued its grievance through extraterritorial legal action, trying to use the British courts (among others) to sue the Venezuelan government for £12billion. Happily for the state of relationships, this ploy was thrown out. But, while Exxon fumed, the other oil majors stayed put, adapted and are doing pretty well, thank you, whatever the superficial difficulties.

One might conclude, indeed, that the Venezuelan experience confirms that oil companies should not cry wolf too often about the burdens of taxation.

The Chavez government needed a better deal on the oil revenues to fund its massively ambitious programmes in health, education and housing. It concluded that deals which existed with foreign oil companies were far too generous and set about changing the terms of engagement. But, ultimately, it had no interest in driving them out. And that gamble has paid off. Most remain and are very far from being in penury.

Aberdeen, of course, is familiar with PDVSA, which is a regular attendee at Offshore Europe, a frequent exchanger of technical expertise and a steady source of students to The Robert Gordon University, with which there is a particularly strong relationship.

Indeed, Hugo Chavez has been awarded an honorary degree by Robert Gordon’s and the Venezuelans would very much like to see conditions created in which he could visit the city and collect it in person.

That would be a good all-round result.

Having a friendly, mutually respectful relationship with the country that has the world’s largest oil reserves and drinks more whisky per head than anywhere else cannot be a bad idea for Scotland.

Throw in the fact that the vast majority of Scots would, I trust, endorse the basic aims of poverty eradication and fairer wealth distribution and you have a pretty strong case for a Scottish-Venezuelan Society.

I will be delighted to hear from both companies and individuals who share that view.

Brian Wilson can be contacted at BrianWilson@ mangersta.net

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