Americas Quarterly today carries a followup that to my 29 August piece on Post-Chavez changes at PDVSA.
Drilling rig (PDVSA)
NOTE: During the past couple weeks, while in Maracaibo and Caracas, I was repeatedly told of a new offshore payment mechanism that PDVSA has begun offering to its Joint Venture foreign partners. Venezuelan private sector leaders took credit for the general idea. Continue reading
Posted in Chavez, Chavez lagacy, Chavez legacy, China, Faja of the Orinoco, heavy oil, Hugo Chávez, Latin America and Caribbean, Maracaibo, PDVSA, Trade and Commerce, Venezuela oil, Zulia
Tagged Americas Quarterly, Caracas, Maracaibo, Nicolás Maduro, PDVSA, Petróleos de Venezuela, Twitter, Venezuela
PDVSA oil rigs in Venezuela (TalCual)
Throughout 2012, and especially after President Hugo Chávez’ death in early March 2013, Venezuela’s national oil firm, Petróleos de Venezuela S.A. (PDVSA), has taken measures beyond anything done in the past decade to raise its lagging production. While the likely impact merits cautious analysis, the drivers of the Bolivarian Republic’s scramble for increased oil revenues are clear. … Continue reading
Posted in Chavez, Chavez lagacy, Chavez legacy, China, Faja of the Orinoco, Gaddafi, heavy oil, Latin America and Caribbean, Libya, Maracaibo, Oil prices, OPEC, PDVSA, PDVSA weakness, The USA, U.S. oil, Venezuela oil, Zulia
Tagged Beijing, Carabobo, Caracas, China, Heavy crude oil, Hugo Chávez, Nicolás Maduro, OPEC, PDVSA, Petróleos de Venezuela, president hugo chavez, Rafael Ramírez, South America, United States, Venezuela, Venezuelan
Iraqi oil production has surged. Source: EIA
[Updated/edited 5 June] The New York Times had an interesting article: “China is reaping biggest benefits of Iraqi oil boom” on June 2, 2013. The question that comes to mind is …
Why is Chinese production in Iraq booming, and in Venezuela lagging?
As late as 2007 and 2008, China clearly intended its investments in Venezuela to be its largest anywhere, to ramp up development of Venezuela’s huge Faja Orinoco extra-heavy oil reserves. In those years, Iraq was still mired in sectarian war. Yet, here we are in 2013, with Chinese production in Iraq surging and its companies’ production in Venezuela lagging. Why? Let’s first look at the Chinese relationship and logic in Iraq, then in Venezuela.
Geostrategic interests behind profit issue
The NYT article says that Chinese success in Iraq is largely because their oil companies aren’t especially interested in profits because they don’t have to answer to investors demanding higher returns; they just want to secure oil to bring home.
Yes, but one should see that this is also strongly a geostrategic imperative for Beijing. It is true Chinese firms can get along with lower profits, and they also have much more cash than others, which also helps them get in now at small profits for the long run. However, unlike other firms, they are under specific instructions by Beijing to persist at getting into countries with huge reserves like Iraq and Venezuela because it is in the geostrategic energy interests of Beijing to do so.
Chinese geostrategic motivations to stick in Iraq (and Venezuela)
Before examining the better situation, on the ground, for Chinese firms dealing with Baghdad as verses Caracas, it is important to recognize Beijing won’t ever give up on either state. Beijing is the one power having serious reservations about too much reliance on the US/Saudi-dominated “global barrel” market-and-security system. It is the only major power (aside from Russia) with aspirations to project power against the USA and its naval carrier fleets, at least in its near-home waters. For any such confrontation of any duration, it needs to have a certain significant percentage of oil brought directly home independent of the USA and the global market the USA dominates. So, China’s energy firms tend to blend their deepening integration into global oil-market processes with old-fashioned bi-lateral mercantilist relationships with producing states like Iraq and Venezuela. (See also the Addenda below.)
Different contractual and working relationships in Iraq and Venezuela
Venezuelan oil production has lagged. EIA 2012
Chinese firms are clearly more willing to work with the difficult resource-nationalistic conditions imposed by the Iraqi and Venezuelan states. However, in many ways Iraq’s are more difficult, yet Chinese–and many others–do better getting production going in Iraqi than Venezuela. Why? Continue reading
Posted in Chavez, Chavez lagacy, China, Faja of the Orinoco, heavy oil, Henry Capriles, international relations, Iraq, Iraqi oil, Oil supply, OPEC, PDVSA, Persian Gulf, The USA, U.S. oil, Uncategorized, Venezuela oil, Venezuelan Nationalism
Tagged China, Iraq, Middle East, New York Times, Oil reserves in Iraq, PDVSA, United States, Venezuela
I’m invited to deliver a public lecture Wednesday, 24 April, at 3:30 in New York City at The New School University‘s Graduate International Affairs. This will be a critical examination of the legacy of Hugo Chavez’ “oil socialism” as an “alternative developmental model” for Latin America. Continue reading
Posted in Chavez, Chavez lagacy, Chavez legacy, Chavezsuccession cancer, China, Faja of the Orinoco, heavy oil, Henry Capriles, Hugo Chávez, Institutions and rule of law, international relations, PDVSA, PDVSA weakness, Venezuela update, Venezuelan Democracy, Venezuelan elections, Venezuelan weak institutions
Tagged Hugo Chávez, Latin America, New York City, The New School, Venezuela
Below is a “Special Reprint of Petroleum Intelligence Weekly for The Global Barrel”–I was quoted in three EIG articles last week.
A special thanks to James Bourne, Energy Intelligence’s Senior Editor for Latin America. James is moving on to new challenges in Singapore His frequent calls with probing questions and insightful analysis of Venezuela and Latin America will be sorely missed here!! Una buena despidida – mucho éxito en todo!
tough_choices_after_chavez_energy_intell_11Mar13
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Posted in Chavez, Chavez legacy, Chavezsuccession cancer, Faja of the Orinoco, heavy oil, Hugo Chávez, PDVSA, PDVSA weakness, Venezuela update, Venezuelan elections, Venezuelan Nationalism, Venezuelan weak institutions
Tagged Business and Economy, energy intelligence, Hugo Chávez, James Bourne, Latin America, Nicolás Maduro, Social Sciences, South America, United States, Venezuela
Deutsche Welle, the German international TV service, interviewed me on the
legacy of Hugo Chavez on their live evening news broadcast Journal from Berlin. I tried to relate two, strikingly contradictory aspects of President Chavez legacy:
The outpouring of sincere affection for him from the poor and many others in Caracas, which the world is witnessing, as the embodiment of their liberating political awakening. And, in contrast, the utter shambles in which Hugo Chavez, as a practical political leader of 14 years, left the Venezuelan state and economic institutions, including PDVSA. My segment comes at 4:08 minutes into the video stream here:
Venezuela’s troubled national oil company, PDVSA — Post-Chavez Reforms ?
What’s the future of PDVSA post-Hugo Chavez? My comments to Platts Energy writer Mery Mogollon were quoted in detail today in Oilgram News. A JPEG image is below (click it to enlarge). My thanks for permission to post it here. Continue reading
Groundbreaking, PetroChina-CNPC refinery for PDVSA heavy oil. It is to be China’s largest. (April 2012)
Over the past few weeks, I have been looking at the state of the Venezuelan-Chinese oil alliance that Hugo Chavez has so fervently championed. The picture that emerges is not what one might expect. Here is an overview, in qualitative terms. [Correction: I originally wrote Ramirez reported that PDVSA produced “60,000” new barrels of Faja oil in 2013. He actually said “20,000”.]
A. Structural Changes – Vertical Integration with China
Till now, commentators have looked primarily at the obligations of the Bolivarian Republic of Venezuela (BRV) to send oil to China to repay Beijing’s huge loans. However, there are major changes afoot in the structure of this relationship, no matter who succeeds Hugo Chavez. Developments on the ground in both countries show an energy infrastructure buildup will soon bring significant cross-border vertical integration. Soon, Venezuelan oil will not be shipped to China simply to fulfill financial-and-contractual obligations, but also for locked-in infrastructural reasons.
All indications are that the Chinese side is actively fulfilling the obligations it entered into ca. five years ago (esp. December 2007) to build oil tankers, pipelines and refineries in China in order to import and process Venezuelan heavy crude.
The Supreme Court of Venezuela has just made a rather strange decision. Rather than deciding between the two possible scenarios described in the constitution for the case when a president-elect is unable to take the oath of office on the prescribed day of 10 January, they have instead pronounced a third scenario proposed by leaders of Chavez’ party: There is “no temporary absence” of Chavez, and there is “administrative continuity” (i.e., that there is no new administration since he was the previous president).
The decision by the TSJ [press conference 9Jan 2012] seems particularly amazing as it rejects the constitutional option of declaring Chavez “temporarily absent” that would have kept Chavismo in the presidency without an election for 180 days.
This decision is just as transparently un-constitutional and invented as the rationals of the right-wing Honduran military and congress in 2009 for throwing the president out of their country in his pajamas, rather than pressing whatever grievances or charges they had against him within the framework of the constitution. There is a habit growing in Latin America of “democracies” being unwilling to fight out political crises within the sphere of the constitution and the nation’s institutions.
Here’s the situation in Venezuela: The vice-president and acting president, Continue reading
A succession crisis is stalking Venezuelan society. 
President Chavez of Venezuela is again in Havana, after a complex six-hour surgery, his third in a year for an unspecified form of cancer. Just before the surgery, he returned to Caracas to address the nation. For the first time he spoke about what he wishes to be done if he is unable to return to the presidency. Continue reading
“Methane gas at 24%, H2S gas (hydrogen sulfide) 4%. We’re dying.”
Late Friday night, 24 August, Rigoberto Colina García, a 29-year-old worker at a lubricant company just outside the Amuay Refinery compound in Venezuela’s Falcon State, had sent this message on his Blackberry. (La República, 28Aug12) Some hours later, at 1:11 AM Saturday, a tremendous explosion killed over 40 people sleeping or working in buildings beyond the refinery’s perimeter, including Rigoberto and four of his co-workers.
This is the worst disaster in Venezuela’s modern oil history, and one of the worst refinery accidents ever worldwide. This week, across Venezuela, President Chavez and PDVSA leadership have been targets of public criticism and outrage.
Clearly, industrial and political policies of PDVSA and the Venezuelan state contributed to this disaster. Meanwhile, yesterday I found a somewhat tangential, but particularly unseemly fact. It seems that President Chavez’ only recent involvement with Amuay in the months preceding this disaster had nothing to do with improving the productivity of the facility, much less the safety of workers and neighboring citizens. No, rather, his involvement was a scheme to bolster PDVSA’s material support for the dictatorial regime of Syria’s Assad in suppressing the popular revolution there. This scheme apparently accounts for the origin of some of the naphtha that burned for four days following the explosion. But first, the facts of the disaster, in so far as they are known. Continue reading
Posted in Chavez, PDVSA, Uncategorized
Presidents Chavez and Ahmadinejad met in Caracas in January (here) and June 2012
I was cited a number of times yesterday in a Bloomberg News article by Nathan Crooks in Caracas and Paul Burkhardt in NYC. I reprint it below because the authors’ research further illustrates an issue I’ve often stressed here.
That is: in spite of President Chavez’ rhetoric promising to stand by Presidents Ahmadinejad of Iran (and Assad of Syria, and previously Qaddafi of Libya), he is actually in no position to withstand the U.S. sanctions that could be imposed on Venezuela for aiding Iran. Continue reading
Posted in Chavez, Economic Crisis, Energy and Environment, Faja of the Orinoco, Gaddafi, heavy oil, Hugo Chávez, international relations, Iran sanctions, OPEC, PDVSA, Persian Gulf, Sanctions, The USA, U.S. oil, Uncategorized, Venezuela diplomacy
Tagged Chavez, Hugo Chávez, OPEC, Petróleos de Venezuela, Venezuela
Petrodelta,SA rig in the south of Monagas state, Venezuela (PDVSA 2011 Annual Rept)
In March, U.S.-based Harvest Natural Resources (HNR) had disclosed to shareholders it was in exclusive confidential negotiations with a national oil company (NOC) to sell its 32% stake in Petrodelta SA–a lucrative, mature, medium-heavy Faja oil field in the south of Monagas state, in which PDVSA holds a 60% share. Thursday evening, Harvest surprised observers by announcing they had signed an agreement with the Indonesian National Oil company, Pertamina.
The big question immediately being asked was: “Indonesia? Why not China?” I was quoted at length Friday morning on this question by Bloomberg’s Nathan Crooks in Caracas (See:
A curious announcement in The Tehran Times: “Tehran, Caracas to ink $2 billion oil deal soon” (29 May, web 30 May) followed on the heels of my exposé about this relationship that was published just two weeks prior. The Tehran Times’ piece was brought to my attention by James Bourne, Senior Latin American Editor at Energy Intelligence NYC, 
who requested a comment. Energy Intelligence has kindly provided GlobalBarrel.com a PDF of Bourne’s piece in their subscriber-only Oil Daily of 31 May, which you can read at this link: Continue reading
For those who read Spanish: Today Tal Cual in Caracas carried a detailed summary in Spanish by Jose Suárez Núñez of my study, “Bolivarian Venezuela’s Oil Policy & Iran: A Failed Energy Alliance” (which appeared in Middle East Economic Survey’s [MEES] Energy and Geopolitical Risk for May 2012).
Suárez Núñez is the Tal Cual oil columnist, and one of Venezuela´s most senior oil journalists. Here are the links: Continue reading
The Global Barrel 