Your Excellencies, Ladies and Gentlemen,
First, I would like to thank you on behalf of the Bolivarian Republic of Venezuela for the opportunity you have given us to address such a prestigious audience in the framework of such an important event as this Forum. Similarly, I would like to recognize the Italian Republic and the organizers of this Forum for all the hospitality you have provided and the successful completion thereof.

The organizers asked me to speak during this session about the topic of the requirements and conditions that will lead towards an energy-sustainable future for humankind. The concept of sustainability can be approached from different angles, including the damage caused to the environment by current hydrocarbon consumption patterns; the climate change associated to carbon dioxide emissions from fossil fuels; or the accelerated depletion of key reservoirs in different oil provinces throughout the world.

Notwithstanding, based on the fact that this speech is given to ministers, and taking Venezuela’s experience into account, I would like to approach the topic of energy sustainability from a political perspective, namely that of the relations among consuming and producing countries, and the legal contractual framework of oil production when private capital is part of it.

It is our understanding that these relations are deeply asymmetric. The importance of ensuring fair remuneration for private capital invested in oil production activities done in producing countries has been repeated ad nauseam during this Forum, as Romans would say. Moreover, oil producing countries have never questioned the idea that capital has a right to fair returns; quite the contrary, they have expressly confirmed this in every possible way.

Unfortunately, while oil producing countries have accepted this principle, large consuming countries have not accepted another equally essential principle that complements it, namely the right of producing countries, as owners of such a valuable natural resource that is also exhaustible and non-renewable, to receive fair equity remuneration for allowing others to produce it.

When producing countries have openly made this legitimate demand, they have faced a wall of silence at best, or open aggression at worst. This is the recent history of most oil producing countries.

On the other hand, we cannot simply neglect the fact that a campaign has been crafted by supranational institutions such as the International Energy Agency, the World Bank or the International Monetary Fund, to systematically deny this right and question the legitimacy of the fiscal claims made by countries that own these natural resources. These institutions claim that such fiscal claims obstruct investments necessary to increase production capacity.

In fact, what these institutions seek is to deny the relevance of natural resources and reduce everything to an investment issue.

The fact that producing countries do not accept or understand their rights to manage their natural resources makes oil production virtually non sustainable in the long run.

A good example of this is Venezuela’s case where the de facto expropriation of the State’s sovereign rights and eminent domain took place within the framework of an oil liberalization and globalization policy, called Oil Opening, at the beginning of the 1990’s.
The process to privatize our national company, Petroleos de Venezuela, began as part of this policy, and led the State to grant control over oil production to multinational corporations, thereby giving massive fiscal incentives and broad de facto powers to administer such production.

The Oil Opening process had disastrous consequences for Venezuela. The most serious and evident one being the collapse of the Venezuelan State’s fiscal revenues, which plunged the country into a terrible economic and social crisis that brought about the immediate consequence of a period of violence and political instability.

Furthermore, the Oil Opening process had international effects since it became an instrument to undermine the unity of the Organization of Petroleum Exporting Country’s core by having Venezuela introduce a volumetric policy. This policy became one of the factors that triggered the 1998 oil crisis and the collapse of oil prices, which in turn created a climate of uncertainty and lack of investment that still has worldwide effects.

The Oil Opening process politically fractured Venezuela and it was so profound that it led the oil industry to a halt caused by an artful sabotage which damaged the country to such an extent that it is now that we have recovered from it. Based on all the aforementioned, it is clear that the Oil Opening process could not be the base for an energy-sustainable future, neither for Venezuela, nor for countries that consume Venezuelan oil, not even resorting to force.

President Chavez’s Oil Policy has been oriented at ending the unacceptable situation created by the Oil Opening process and its effects on the country and on OPEC’s core. This goal, unquestionable to all of us, was probably the reason for the complains laid out by Mr. Tanaka during his speech yesterday.

Returning control over oil production and policy to the Venezuelan State entailed a coup d’état, political instability and numerous international pressures. This was the price we had to pay to recover our sovereignty.

At the end of this process we were able to have dozens of companies of all sizes understand and accept the need to build a legal and contractual regime acceptable to all of them, based on fact that their economic rights were always acknowledged, and at the same time acceptable to our Nation and its indisputable property rights over its non-renewable exhaustible natural resources.

The main objective of this plan was fair remuneration for the natural resource within the framework of Venezuela’s tax sovereignty. Currently, over 30 multinational corporations work with us under our legal framework and with a view to expanding their activities in the country.

Only one company, ExxonMobil, chose confrontation and hostility to tackle the sovereign decisions made by our country. ExxonMobil even attempted before a court in London the unprecedented action of freezing global assets of our national company, PDVSA.

Fortunately, the London court fully dismissed such plea by ruling on the merits of the case on favor of Venezuela and oil producing countries, which benefited the stability of the entire international oil market.

If we discuss the political sustainability of oil production in earnest, we would find that the true threat came in the most recent past -1980’s and 1990’s, to be more precise- from the most powerful consuming countries and from corporations such as ExxonMobil. The effects caused on the oil market by the arrogant actions taken by ExxonMobil demonstrate the true origins of the threats posed to the stability of oil markets.

Ultimately, the sustainability of an international oil regime has to be evidenced by a continuous and suitable flow of private and public investments. And this is possible only if countries abide by certain essential economic, legal and political principles that respect, as we have indicated, the sovereign rights of States and the economic rights of both investors and owners of the natural resource.

In Venezuela, upon recovering from past neoliberal attacks, we have created a legal regime that fairly abides by these criteria. And we are convinced that, to the extent in which other countries understand this advantage, we would have made a modest but significant contribution to an energy-sustainable future by facilitating the development a new international system that overcomes the aforementioned asymmetries.

Finally, I would like to point out that the root of the problem of oil income’s control and usufruct is the world’s division in unequal communities and national States that have different levels of development. There cannot be a “final” solution to this problem that does not require simultaneously overcoming these differences.

Yesterday, the International Energy Agency maintained that the problem that affects the international oil market is politics (sic). And I was wondering: isn’t it a political issue that a sole country consumes a quarter of the oil produced in the entire world to sustain a lifestyle based on waste? And isn’t it a political issue that the poorest consuming countries now have to pay higher prices to buy food thanks to biofuels? The fact that the International Energy Agency, which is a social club of rich countries, is trying to establish itself as a defender of poor countries would be ironic if it were not so preposterous.

In this regard, I would only like to point out that oil exporting countries have been historically concerned about this issue. This was the reason for the creation of OPEC, of the different cooperation programs among oil producing countries, and of the initiatives implemented by our Government such as Petrocaribe and Petrosur, which allow us to currently supply 300,000 fuel barrels under exceptional conditions to the smaller countries of the region.

The great consuming countries cannot put pressure on OPEC member countries claiming that the poorest countries are being affected by high oil prices without first doing something effective to alleviate global asymmetries and contribute to the planet’s sustainable development.

Thank you very much.

Rome, April 22, 2008