Oil Expansion, Essay Example

With regard to American Companies expanding into the South American petrochemical market, particularly that of Venezuela, there are a number of important considerations.

Political:  The US has a troubled relationship with the present Government of Venezuela under President Chavez. His previous sentiments have been anti-American and he has developed alliances with the likes of Cuba, Libya and Iran.  It has also been reported that the country has terrorist links with both Hezbollah and Al Qaeda. Despite this Venezuela remains one of the top 4 oil suppliers to the United States. “In the sphere of actions, the difference is marked. While the U.S. government has repeatedly attempted to undermine Venezuelan democracy, the only action taken by the Venezuelan government in the U.S. has been providing low-cost heating fuel to poor Americans.” (James, 2006).  Given the above, it is possible for American Companies to do business in Venezuela but they must be aware of changing political horizons and the ramifications to the Company.

Culture: Venezuela has a diverse cultural background consisting of Hispanic, African, and Native South American people.  The company has an established reputation in the Oil production field and the current Government has good relationships with its neighbours. Crime is also a concern for anyone conducting business in the big City’s “Although street crime in Caracas and Maracaibo is depressingly high, elsewhere around the country is relatively safe” (Berlitz Travel Guide, 2010).

Legal risks:  Venezuela is a signatory to a number of international agreements including the USA with OPIC (Overseas Private Investment Corporation).  “Venezuela has been a member of the Organization of American States since 1952” (Hoet Pelaez, 2005). So there are numerous legal treaties and conditions that support US business with Venezuela.

Authorities:  In expanding oil production into the South American region of Venezuela you will need to deal with a number of authorities including that of: The Government of Venezuela, Mercantile Registry Office, Venezuelan Commercial Lawyers etc. There are numerous hoops to jump but there are plenty of legal precedents to refer to that would guide you through this process.

Works Cited

Berlitz Travel Guide. (2010). Venezuela. Retrieved 8 19, 2010, from Berlitz Travel Guide: http://www.berlitzpublishing.com/berlitz/bguides_display.asp?sf_01=name_exact&st_01=venezuela&sf2=heading_exact&st2=crime_security&sp_01=AND&sort=sectionsort&TAG=&CID=

Hoet Pelaez, C. &. (2005). Guide to doing business in Venezuela. Caracas: Lex Mundi Law Firm.

James, D. (2006). U.S. Intervention in. Global Exchange, 3-38.