Global Oil Trade

Global Stratification

Ecuador’s state owned oil company, Petro Ecuador, seized the assets of Brazilian oil company, Petrobras. (Gill, Bloomberg News) Populist president, Rafael Correa, who first took office on January 15th, 2007, imposed the oil nationalization law on July 24th of this year. (CIA World Fact Book) Ecuador’s Minister of Non-Renewable Natural Resources Wilson Pastor told reporters that Ecuador would pay an “adequate” price for Petrobras’s assets.   President Correa seeks to switch from profit-sharing contracts to flat fee service agreements in order to increase state revenue from energy and mining (Santeago, Bloomberg business weekly)

While many countries have accepted the new service contracts so that they can continue to do business in the country, others like Petrobras from Brazil, and two subsidiaries of China’s top energy company, CNPC, have resisted.   Representatives from the Chinese firms Andes Petroleum and Petro Oriental have said that the negotiations were “marked by a lack of transparency – in terms of take it or leave it, confiscatory measures and pressure to accept conditions. (Santeago, Bloomberg business weekly)

Ecuador’s relationship with foreign multinationals like Petrobras and CNPC can be viewed from the conflict perspective.   These multinationals exploited local workers and Ecuador’s natural resources for profit.   However, the people fought back by electing a populist president and he returned possession of Ecuador’s natural resources to the Ecuadoreans.

An article from the New York Times from April 19th, 2006 discusses China’s increasing oil demand and how this affects the United States in light of President Hu Jintao’s visit to the Bush White House.   The Bush Administration was concerned that China’s insatiable demand for oil would affect its stance on sanctions against Iran over its nuclear program.   China spent a good part of this past decade investing heavily in Iran.   Since China is a permanent member of the...