Posted on14.May.2022|Comments Off on Latin American Oil: Beijing Still Lending, But for How Long? – I’m quoted by Energy Compass
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 →
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 →
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 deVenezuela (United Socialist Party of Venezuela—PSUV), whose loyalty requires his polarizing words and deeds. This conundrum already wrecked a previous dialogue.
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
Back in April, Brazil’s Folha de SaoPaulo ran an article entitled: “The Future of Venezuela Depends on China“ and highlighted this quote: Translation:“If Maduzo wins, he’ll have to regain the confidence of the Chinese.” TOM O’DONNELL, petroleum consultant
Indeed, it is now clear that the short-term strategy of the post-Chavez Maduro-Cabello administration was to escape the country’s severe dollar crisis: convincing Beijing to extend it a $5 billion cash loan alleviating food-import shortages before 8 December elections. In particular, the cash was to fund a new dollar exchange system (see El Nacional,25 Sept 2013). Continue reading →
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 →
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 →
For Spanish speakers: below is an article from Tal Cual daily in Venezuela summarizing my blog on Saudi oil minister al-Naimi’s opinons on the “North American tight-oil revolution” and their implications for Venezuela and Iran. The article is by Jose Suarez Nunez.
Para hispano parlantes: Aquí abajo está un artículo en Español publicado en Tal Cual de Caracas, un resumen de mi blog de la última semana que trató en las opiniones del ministro de energía saudita Sr. al-Naimi, y en las implicaciones para Venezuela e Irán. Continue reading →
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:
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 →
(Greetings! It’s good to be back blogging.) The common perception is that Chinese oil companies in Venezuela are winning big deals on very favorable terms.However, as I’ve stressed in previous posts, Beijing is actually very frustrated not to be getting the deals it expects for new Faja heavy oil fields, especially considering its big investments in the Bolivarian state. More evidence continues to emerge.
a. Chavez’ recent interest in increasing national oil production
b. The existential crisis Chavismo faces from the slow collapse of dysfunctional state institutions, civil infrastructure, and nationalized enterprises
II. Changes on China’s side that enhance its role in Venezuela:
a. China has now loaned Venezuela so much money, and Venezuela so badly needs continued Chinese financing (lately it also feels a need for managerial and technical assistance), that Beijing has been able to insist Caracas not only begin to come through on long-awaited heavy-oil contracts, but that it also comply with certain geo-political and fiscal-accountability conditions. A couple of these are pretty amazing.
I. Changes on the Venezuelan side enhancing the Chinese role: a. Chavez’ new interest in increasing national oil production
One reason for China’s deepening influence in Venezuela is that PDVSA‘s president and energy minister, Rafael Ramirez, is no longer alone in insisting that PDVSA’s level of production has to rise. President Chavez now seems to have gotten behind the need to increase national production. If the price of oil falls significantly (many feel six months at an average of $60/barrel would be ruinous) and PDVSA’s exports per day have not risen to compensate, Venezuela will be in real trouble. Venezuela is extraordinarily dependent on imported goods, from food to machinery for which dollars are needed; and it also must keep up payments to foreign bond holders, for which a steady stream of dollars are also needed. Chavez and Ramirez have every reason to expect that the world’s economic woes will lead to a decrease in oil demand over the next year or two, and this of course can lead to significantly lower prices. These fears were not apparent in the recent past. It has been more or less a tenent of Chavista faith at elite-and-professional levels that the price of oil will never again fall significantly. I have been told this many times. Continue reading →
It would NOT TAKE ROCKET SCIENCE to make huge increases in energy efficiency and reduction of greenhouse gasses in the USA. Here is an interview I gave, from Caracas in late 2009, to Erica Dingmann., on what needs to be done in transportation infrastructure and energy to REALLY make some big, practical gains in the USA. It does NOT require big breakthroughs in technology.