EU-Venezuela boycott could backfire, but Spain would be the biggest loser

Caracas Daily Journal (Jeremy Morgan): If President Hugo Chavez carries out his threat to cut off oil supplies to European countries who adopt new rules on illegal immigration, he could end up turning his back on Venezuela's third largest market for petroleum exports. The state oil corporation, Petroleos de Venezuela (PDVSA), delivered an average 176,000 barrels a day (b/d) last year.

The two biggest exports destinations were the United States, which took an average 1.46 billion b/d last year, or 69 percent of the overall total, and the Caribbean, with 316 million b/d.

Put crudely, so to speak, both sides of the bilateral oil trade equation between Venezuela and the EU could probably get by without the other. That said, some European countries would be harder hit than others. In nominal terms, the biggest casualty would be Spain, followed by Germany and the Netherlands.

Cutting shipments to Germany would have an impact on PDVSA, which has interests in two refineries in that country. PDVSA also has refinery interests in Holland and Britain as well as equity shares in a company in Sweden. Moves are also afoot for a natural gas deal between PDVSA and Galp of Portugal, which would give PDVSA a foothold in the expanding market for environmentally friendly "green" gas in Europe.

However, where Chavez decides to go further than a largely symbolic oil embargo and to carry out the implied threat of his decision to "review" European investment in Venezuela, that would be a much more damaging move. European companies are estimated to have invested more than five billion euros in Venezuela during the last decade. Again, Spain tops the list, with its companies investing over 1.7 billion euros during the last ten years.

Spanish companies have become big players in Venezuela, with top names such as banks Banco Santander (Banco de Venezuela) and BBVA, oil company Repsol and telecoms company Telefonica.