When oil prices reached their zenith, Venezuelan wanna-be dictator Hugo Chavez nationalized his oil industry, chased Western oil companies out and declared that he could run things better anyway.  After production dropped sharply, Chavez tried partnering with other socialist states like Iran, China, and Belarus to reverse the decline.  Now, IHT reports that with Venezuela near collapse, Chavez has come back to Western oil companies to rescue him from his own incompetence:

President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again.

Until recently, Chávez 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. …

But the shift also shows how the global financial crisis is hampering Chávez’s ideological agenda and demanding his pragmatic side. At stake are no less than Venezuela’s economic stability and the sustainability of his rule. With oil prices so low, the longstanding problems plaguing Petróleos de Venezuela, the national oil company that helps keep the country afloat, have become much harder to ignore.

Good luck with that.  Western oil companies would have to lose their collective minds to invest in Venezuela again, because Chavez simply can’t be trusted.  As one source within the Venezuelan oil ministry reminds IHT, Chavez wound up screwing his partners in China, Iran, and Belarus by changing his mind on oil projects and shutting them down after they spent millions on start-ups.  No oil project in ten years has reached completion, thanks to Chavez’ caprice.  Besides, Chavez still owes two Western oil companies for the nationalization of their assets in 2007, and nothing would stop Chavez from doing it all over again.

Why did Chavez reverse himself?  The collapse of oil prices mean that Chavez has little money for his vast socialism, even if he had maintained production levels as in the past.  However, despite his claims that production remains at 3.4 million barrels per day, OPEC analysts know better.  Venezuela’s production capacity has dropped a third to 2.3 million barrels a day, and that number will continue to drop lower as equipment fails.

Moreover, thanks to Chavez’ conversion of Venezuela to Cuba South, oil is about all Venezuela can export.  In 1998, when Chavez first came to power, oil accounted for 69% of the nation’s exports.  Now it comprises 93%, and an inability to produce puts Venezuela in a difficult economic position in very difficult times.

Chavez needs the Western oil companies.  The question for them is whether they need Chavez more.  If not, they should let him suffer and give Venezuelans a reason to eject Chavez from power.  In the long run, they need a reliable partner in Caracas and not someone naturally inclined to rip them off.