Minister Counselor Kabboul discusses effect of Chavez's re-election on energy policy

With Hugo Chavez being re-elected to another term as president of Venezuela this week, the future of the U.S./Venezuela relationship remains in question. During today's OnPoint, Fadi Kabboul, minister counselor for energy affairs at the Venezuelan Embassy to the United States, discusses Venezuela's desire to keep energy policy and politics separate. He talks about the CITGO-Venezuela Heating Oil Program offered to low-income U.S. households, describing it as a "people to people" program created outside of the political realm. Kabboul also addresses concerns over the rising price of oil.


Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Fadi Kabboul, minister counselor for Petroleum Affairs at the Venezuelan Embassy to the United States. Mr. Kabboul, thank you for joining me.

Fadi Kabboul: Thank you for inviting me.

Monica Trauzzi: Mr. Kabboul, on Sunday, President Hugo Chavez was re-elected to the Venezuelan presidency. The United States State Department issued a statement saying it looks forward to work with the Venezuelan government on issues of mutual interest. However, just two days before the election national intelligence Director John Negroponte criticized Chavez and labeled him as a divisive force. How would you characterize the relationship between the United States and Venezuela, particularly relating to energy policy?

Fadi Kabboul: Well, first of all it's very important to understand the context where Venezuela is placed. Venezuela is one of the major suppliers of oil to the U.S. We supply the U.S. with more than 14 percent of its energy needs. And this relationship goes back many, many years. This is not something new. We are not a new supplier to the U.S. We know very well the U.S. market and we have been supplying this for many years. And President Chavez himself and the government of Venezuela has been very careful to manage the energy issue between Venezuela and the U.S. Even in most difficult times, even in times where Venezuela has run through difficulties in terms of energy production because of the sabotage that we had in 2002, 2003. Venezuela kept its production and kept its export to the U.S. In those two years, 2003, 2004, where the relationship has been very tense, even in 2005, between Venezuela and the U.S., Venezuela kept increasing its production level and kept exporting the same level of exports that we always have been exporting to the US. Even we increased our export of product, which, by the way, many people doesn't pay too much attention to the supply of product. Because not only that we supply crude oil to the U.S., even that we are the fourth largest supplier of the U.S. in terms of oil, we are the second-largest supplier of US in terms of product, which is gasoline, lubricants and jet fuel, etc. So to answer your question the energy relationship has not been impacted even in the worst times. We were trying to keep always energy out of this politics. And we believe that many people here in the US appreciated this. We hope that the US government will appreciate also this relationship.

Monica Trauzzi: President Chavez though has been quoted as saying, when referring to President Bush, "The devil should restrain his crazies here. If not, the U.S. empire is going to regret it if they try to drag us along the road to destabilization." Does the Venezuelan government want to have a less volatile relationship with the U.S.?

Fadi Kabboul: As I said, our relationship with the U.S. has been for so, so many years and we are going to continue this relationship with the U.S. Venezuela, right now, is a global player. And Venezuela wants to have a different relationship with the U.S. and wants also to have a different relationship with many other countries. The energy integration project that Venezuela has with Latin America and ... with Latin America is an important one. The geopolitical plays are displaying not only in this hemisphere, but worldwide, is also important to our relationship. And remember that Venezuela is a member of OPEC, is a founding member of OPEC. So our relationship goes beyond only the relationship that we have with the U.S.

Monica Trauzzi: But you say that you want to continue the relationship with the U.S., but President Chavez has threatened to cut off supplies to the U.S. several times.

Fadi Kabboul: Well, this was, you have to look at it on the context of when President Chavez has said that. President Chavez had said that if the United States threatened the national interest of Venezuela, if there is any threat on invading Venezuela, in that case Venezuela will cut the crude oil. Not only to the U.S., I mean any country who will invade your country, you cannot keep supplying them. So you have to look at it at the context when President Chavez said that. And always the reaction ... position worth reacting to a position that has been imposed or given by the government of the U.S.

Monica Trauzzi: As he enters this new term what can we expect from the energy policy? Will he continue to make these sorts of threats? Will there be a shift in policy?

Fadi Kabboul: No, we are, President Chavez welcomed what Assistant Secretary Thomas Shannon said regarding this. We have been seeing a very good comment from the State Department also yesterday. And we welcome this kind of statement from the United States government. I believe that, as I said, Venezuela is an important supplier to the U.S. We will continue this kind of relationship. We will try to look for more cooperation in both countries, in some common area where we have common interests. And, of course, we have differences in other political issues and we will work to see how we can work out those differences.

Monica Trauzzi: Will President Chavez continue to push OPEC to maintain at least a $50 per barrel price on oil?

Fadi Kabboul: Remember that the situation of the price of oil is related to many issues. I mean there are many, many, many issues that are impacting the price of oil. One of them is the consumption level, worldwide consumption level, the huge addiction of oil in the U.S. There is no symptom of changing the consumption pattern here in the U.S. The huge consumption that is coming from China and India and Asia. And so there are many factors that are impacting the price. It's not that OPEC is the ones that are imposing price. The market itself is imposing the price. And what OPEC is trying to do this to reach a balance between the producer and the consumer on a price, which at the same time is having a fair return to the producer. And at the same time can guarantee the consumer can get their oil at also a fair price.

Monica Trauzzi: So if that balance was below $50 per gallon, would that be accepted by the president?

Fadi Kabboul: No, it's not a question of it's below or above. I mean if you look at it, when the price of oil was approaching $80 OPEC didn't do nothing, because that was not on the hand of OPEC. It's on hand of the market. The market will keep dictating what's the price level.

Monica Trauzzi: And speaking of the markets and the large demand by the United States for oil, in President Bush's last State of the Union address he stated that we need to stop our addiction to oil. And there's a big push in Congress for energy independence for the United States. Is Venezuela at all fearful that if the U.S. became more energy independent it would affect Venezuela economically?

Fadi Kabboul: No, not at all, because first of all we welcome all initiatives in terms of alternative energy. We welcome initiatives for ethanol. We welcome initiatives of biofuel. We see those as a very good sign because technology needs to get improved. The problem here in the U.S. is the consumption patterns. When you look at the consumption pattern in the U.S. there is no way. We don't see energy independence in the U.S. for the next probably 20 or more years, first of all, because all the technology of biofuel and ethanol will represent only very few percentage, probably 2 percent of the consumption for the next 10 to 20 years. So the U.S. will keep depending on foreign oil. And Venezuela is five day shipping to the U.S. with a huge reserve that we are having and the best way for the U.S. to get its oil is from Venezuela, which is having a very almost new conflict, that you can see in ...

Monica Trauzzi: You're very confident about your position?

Fadi Kabboul: Yeah, yeah, very confident.

Monica Trauzzi: I wanted to switch gears to the oil program that you have here in the U.S. Last year Citgo, the state-owned Venezuela oil company, began providing low income households with low-cost oil. The program faced a lot of criticism when it was first started. It's back for a second year. It's gone from 6 states to 16 states. And commercials for ...

Fadi Kabboul: From eight states.

Monica Trauzzi: From eight states to 16. Commercials for the program this year are referring to our friends in Venezuela. Is this a fair characterization of Venezuela's relationship to the U.S.? Or is the Venezuelan government trying to make up for some comments that President Chavez made about President Bush and the U.S.?

Fadi Kabboul: Well, first of all, let me tell you that the heating oil program is a people to people program. It's out of politics. We are not making products with the heating oil program. This has nothing to do with our political relationship with the U.S. with the heating oil programs. The heating oil program came to the picture because the people here in the U.S. asked for it. Citgo received several letters from Congress, several letters signed by senators and congressmen, asking the oil company to do something regarding the high prices of the heating oil. And from those companies only Citgo responded. And when they responded last year, because we started in Massachusetts and the Bronx, and we didn't know that this program will go so far. But then we start, you know, receiving questions. And, of course, before that President Chavez was in New York. He went to the Bronx and he said let's do something with the Bronx. Let's bring the heating oil. He received many calls from the people in the Bronx asking for help, so we start doing this. But then when we finished this program last year, more than 80 beneficiaries went down to Venezuela to thank President Chavez about this program. And they asked President Chavez to continue the program. And the president himself said we are not going to continue. We are going to expand the program to more states and we are going to deepen even the program not only to go over the heating oil supply, but also to go beyond for social programs. So this is what President Chavez said and he instructed Citgo to go and see what is the possibility to do that. And then we started with this expansion to 16 states. So this is people to people programs. This is a humanitarian program. This is related to how we can help those people. And at the end this is not something that is impacting the financing of Citgo. I mean oil companies today are getting windfall returns with the higher prices. And we believe that this is a very good way to give something back to the people.

Monica Trauzzi: You say it's a people to people program, but President Chavez is directly involved in it. Is it sort of double-sided where he's appearing one way in front of the people and another way politically when he addresses legislators and talks about President Bush and the United States in a negative way?

Fadi Kabboul: No, it's not a question of negative way. What he's trying to say is, look, I'm a very good friend of the people of United States. I suffered like you and I suffer when I see you suffer. And this is what he said during hurricanes Rita and Katrina. And I want to do something to help because I am also doing something with the Caribbean. I'm also doing ... with Latin America. And, of course, I'm doing a lot of this for my people in Venezuela. What we have, political differences with the U.S. in the session, this is something apart. And I keep telling these differences with the United States government.

Monica Trauzzi: Final question, we're almost out of time. President Chavez insists on keeping prices high. He says $50 per barrel from OPEC. And then he turns around and donates millions of gallons to poor Americans. Why not encourage that prices stay at a moderate level, something that people can afford and where governments can be happy?

Fadi Kabboul: Well, because it's not on the hand of President Chavez to fix price. This the market will determine. President Chavez can say let's try to see if we can keep it on $50 because he knows that probably $50 is a very fair price for both. But if the price goes to 80 or 90, I mean it is not President Chavez who is the one who can, he doesn't have the control of the market. He cannot ask the Chinese to keep consuming oil. We would love to ask the United States to change their consumption pattern, not to use SUV. But this is up to the U.S. citizen to decide if they want to use SUV or not. So it's not ...

Monica Trauzzi: Would you love the U.S. though to change their consumption pattern? Because that would mean less money for Venezuela.

Fadi Kabboul: It's very important for the United States to change its consumption pattern. No, it's not less tolerant to them, because when we change the consumption patterns in the U.S. means we're going to have more oil to other countries. The U.S. represents only 20 percent of the hemisphere population and they consume 70 percent of the hemisphere energy. So we need to have energy to more developing countries, not only to developed countries. So it's a question of how we can get this whole correct use, a symmetry in the world and get more fair energy consumption.

Monica Trauzzi: OK. We're going to have to end it on that note. Mr. Kabboul, thanks for joining me.

Fadi Kabboul: Thank you very much.

Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.

[End of Audio]



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