Category Archives: Hugo Chávez

What’s keeping foreign oil firms out of Iran? IRG? [CNNMoney quotes me]

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To put Iran’s recent production increases in perspective: On its own, for 37 years, Iran has struggled to produce two-thirds of its pre-revolutionary level of 6 million barrels/day. Now, domestic opposition is again limiting foreign oil companies’ participation to boost production.

Since the Obama-administration’s and Europe’s nuclear sanctions were lifted early this year (marked ‘e’ on the chart), Iran has been expanding its production and exports more rapidly than most experts had expected. Tehran has actually tripled exports since late-2015 (see point ‘f’).  But, here’s the big question: Can Iran sustain this years’ production gains?
If to, this could seriously undermine Saudi Arabia’s global oil-market share, and boost Iran’s sanctions-damaged economy to a long-awaited recovery.
The short answer: Now that foreign sanctions are finally lifted, the battle to boost Iran’s oil exports has shifted to a domestic clash over whether to allow foreign oil companies to have significant upstream involvement. This is a domestic Iranian issue with a long history.
Historical perspective
Let’s start with some historical perspective: The Iranian National Oil Company (NIOC) can only do so much on its own to boost production. After decades of sanctions, it lacks the needed technology and finance.  I told CNNMoney‘s Matt Egan, on Wednesday, that the faster Iran expands on its own, the faster production will plateau. (His CNNMoney article today quotes me .).
This was what happened after the 1980-1988 Iran-Iraq war.(‘b’ on the chart). By about 1992, production had plateaued at almost 4 million barrels/day, under 2/3 of the pre-revolutionary, late-1970’s level of roughly 6 million barrels per day. (‘a’ on chart).  The Iranian president at the time, Rafsanjani, argued to religious conservative and nationalist members of the Majilis that only foreign oil companies’ technology and investments could expand production further. However, he only won grudging approval for an offshore project due to fears that foreigners would bring their irreligious ways ashore and/or undermine the hard-won nationalization of Iran’s oil sector.
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Latin American Oil: Beijing Still Lending, But for How Long? – I’m quoted by Energy Compass

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Last week, Energy Intelligence (EI) quoted me on China’s continued appetite for oil and gas investments in Latin America even with its own  economic slowdown and LatAm’s many political upheavals. (Sincere thanks to EI for a PDF of their proprietary Energy Compass to share on my blog. You can access it below here.)

Some thoughts on China’s strategy: In the case of Venezuela, as the price of oil fell, Beijing quickly eased up on PDVSA’s repayment terms for its huge outstanding loans which are repayable in oil. This shows some willingness to help Venezuela cope with the falling market value of oil. Why? Because, mainly, it is the oil that China has always been laser-focused on – not making interest on these loans.

Generally, it is clear that new Chinese investments or loans are still possible in Latin America. In Venezuela however, Continue reading

My AQ piece: “Russia Is Beating China to Venezuela’s Oil Fields”

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Russian Production & Stakes in Venezuelan Oil Projects (40% stake is limit)

Last October & November I succeeded in interviewing several people in the Venezuelan private sector directly knowledgeable of Russian oil projects with PDVSA. Many Venezuelans wonder what all the Russians-known for their secrecy-are up to there.  Some of my key findings are in Americas Quarterly‘s Winter 2016 edition. Read on … 

Russia Is Beating China to Venezuela’s Oil Fields – By THOMAS W. O’DONNELL

The profits, politics and luck behind Russia’s growing footprint.

Russian companies produce more oil in joint projects with PDVSA than their Chinese counterparts This article is adapted from our 1st print issue of 2016. 

The late Venezuelan President Hugo Chávez, had long envisioned China becoming Venezuela’s biggest oil-sector production partner. So when Rafael Ramírez, then president of Petróleos de Venezuela, S.A. (PDVSA), announced in January 2013 that Russia would produce enough oil with PDVSA by 2021 to become “the biggest petroleum partner of our country,” very few people believed him. It sounded like empty hype.

Yet it turns out that Ramírez was serious. Three years later, Russian companies are already producing more oil in joint projects with PDVSA than their Chinese counterparts. Official figures are either unreliable or unavailable, but according to field data provided by Global Business Consultants (GBC), a Caracas-based energy consulting firm, Russia-Venezuela production as of late 2015 was 209,000 barrels per day (bpd), compared to China-Venezuela’s at a bit over 171,000 bpd.

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“Venezuela: Petroleum, Politics & Economics in the Post-Chavez Era”–My Columbia U. talk, with Luiz Pinto, 9 October

If you’re in New York:  Luiz Pinto and I speak at Columbia University’s Institute for Latin American Studies (ILAS) on post-Chavez Venezuela, 12-noon, Thursday, 9 October: ilas_venezuela_columbia_talk_09oct14

Aside

Last week, I was quoted in the Wall Street Journal on why Petróleos de Venezuela SA (PDVSA) is looking to sell its Citgo refining affiliate in the USA. The key motivation, in my estimation, is to finance projects critical to … Continue reading

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My AQ piece: Maduro’s Conundrum as UNASUR Starts Venezuelan Peace Talks

Venezuela Pres. Nicolas Maduro during first UNASUR-and-Vatican mediated peace talk with opposition in Caracas 10 April (Reuters)

Venezuelan President Nicolas Maduro speaking during the first UNASUR-and-Vatican mediated peace talks with the opposition in Caracas 10 April (Reuters)

Here’s my commentary at Americas Quarterly today, 11 April:

A delegation of foreign ministers from the Union of South American Nations (UNASUR) returned to Caracas on April 7 and 8, securing an agreement to hold peace talks to calm political polarization and protests in Venezuela.  The talks are being mediated by the foreign ministers of Colombia, Brazil and Ecuador, plus a Vatican representative.

The UNASUR delegation first visited in late March, recommending that Venezuelan President Nicolás Maduro and leaders of the opposition’s Mesa de Unidad Democrática (MUD) enter into a dialogue.  The U.S. State Department had expressed support, as had Organization of American States (OAS) General Secretary José Miguel Insulza.

However, UNASUR’s plan will be complicated by Maduro’s reliance on paramilitaries within his Partido Socialista Unido de Venezuela (United Socialist Party of Venezuela—PSUV), whose loyalty requires his polarizing words and deeds. This conundrum already wrecked a previous dialogue.

In early February, before protests broke out, a highly placed government official explained to me,  …  CLICK to Continue Reading at Americas Quarterly. Continue reading

Venezuelan state’s economic response to protests: Rationing plus Chinese and Russian loans to float a liberal dollar market

The anti-government protest in eastern Caracas 13 March ended in clashes with Venezuelan police BBC
The anti-government protest in eastern Caracas 13 March ended in clashes with Venezuelan police. Three more died in widespread protests. BBC

As protests continue against Venezuela’s faltering “oil revolution,” the political strategy of the chavista administration is striking for its intransigence. President Maduro has refused to recognize any grievances by students or other protesters. He calls protesters “fascists” and blames them for all the ills of the economy.  Protests are attacked by the national guard and often by state-organized paramilitary gangs on motorcycles who are praised by the president.

The administration’s strategy so far appears to be that protests will burn themselves out if they can be delegitimized and contained within middle-class areas.  Accordingly, the president’s rhetoric aims at inciting poorer citizens against protesters.  All in all, this is a risky strategy.  Protests have constantly intensified, with perhaps 25 persons dead now.
After a month of protests, the administration has taken urgent economic measures it hopes will undermine the protests and prevent their spread to poor and working-class barrios.
1. Ramirez announces Chinese and Russian loans and the launch of a very liberal Sicad 2