What will happen with Venezuela's oil sector? Privatization needed?

[jose chalhoub + 388]

Watching how the collapse of Venezuela's oil industry looks close to inevitable, will it face a process of privatisation soon? 

[Rodent + 1,424]

46 minutes ago, jose chalhoub said:

Watching how the collapse of Venezuela's oil industry looks close to inevitable, will it face a process of privatisation soon? 

I can't imagine what that would even look like. Foreign companies already took a stab at Venezuela, only in mid-2000s to be stripped of a fair portion of their projects as it was turned over to PDVSA. Foreign oil companies will need some pretty big assurances, and assurances that those assurances will be honored. Once bitten and all...

[cryptocurator + 17]

not much assurance to be found in arrest of two Chevron employees in Venezuela last week, ostensibly for refusing to sign parts of a contract for a JV with PDVSA ... they're being charged with treason! This is a different kind of 'privatization'. 

 

 

[Rodent + 1,424]

Just now, cryptocurator said:

not much assurance to be found in arrest of two Chevron employees in Venezuela last week, ostensibly for refusing to sign parts of a contract for a JV with PDVSA ... they're being charged with treason! This is a different kind of 'privatization'. 

 

 

Right. Chevron had already pulled out some personnel late last year as the violence in country escalated. I guess they didn't pull out enough people.

[Blockchainbull + 26]

so the first step is to try to force the majors to sign all these new contracts that clearly go beyond a few adjustments if no one's willing to sign them and will let themselves get arrested rather than sign ... if they can't get anyone to sign it will further paralyze production and they won't have any choice but privatization. This is the prelude to asset confiscation. 

[Kate Turlington + 44]

that puts the oil majors right in the middle of this battle between Venezuela and DC...

[TraderTate + 186]

looks like they just evacuated the rest of their execs

https://uk.reuters.com/article/uk-venezuela-oil-chevron-insight/chevron-evacuates-venezuela-executives-following-staff-arrests-idUKKBN1HW2B5

[Rodent + 1,424]

Repsol pulled all of its staff out last year, and Statoil and Total pulled some too. But Total is pretty bent on sticking around, so it would seem, although these chevron arrests may make them reconsider.

This is BAD BAD for Venezuela. PDVSA can not do this on their own, which is why they let foreign oil in in the first place. Now they are even less able to go it alone. Venezuela is not playing a smart card here. 

https://oilprice.com/Latest-Energy-News/World-News/French-Total-Willing-to-Tough-It-Out-in-Venezuela.html

[Rodent + 1,424]

7 minutes ago, Blockchainbull said:

so the first step is to try to force the majors to sign all these new contracts that clearly go beyond a few adjustments if no one's willing to sign them and will let themselves get arrested rather than sign ... if they can't get anyone to sign it will further paralyze production and they won't have any choice but privatization. This is the prelude to asset confiscation. 

which is just a repeat of the Chavez regime. Nothing new under the sun.

[WaytoPeace + 62]

Unfortunately, there is an alternative to privatization.  That is to turn an increasingly larger  share of the rights to production over to the Chinese or Russian enterprises.  They, at least, would be able to upgrade the facilities and pay the workers.  My guess is that they are sitting on the sidelines waiting for things to become more desperate, such as if and when the US imposes more sanctions on Veneszuela.  In the meantime, they are trying to get as much oil out as they can to help repay at least some of Venezuela’s past debts to them. 

[Rodent + 1,424]

6 minutes ago, WaytoPeace said:

Unfortunately, there is an alternative to privatization.  That is to turn an increasingly larger  share of the rights to production over to the Chinese or Russian enterprises.  They, at least, would be able to upgrade the facilities and pay the workers.  My guess is that they are sitting on the sidelines waiting for things to become more desperate, such as if and when the US imposes more sanctions on Veneszuela.  In the meantime, they are trying to get as much oil out as they can to help repay at least some of Venezuela’s past debts to them. 

But Russian and Chinese workers would still be at the mercy of Maduro's socialist regime. Treason doesn't look good on anyone.

[jose chalhoub + 388]

Personally i can tell you all and thanks for jumping into the discussion and my pleasure to participate here. I worked for 13 years at PDVSA until 2016 when i left and i developed an interesting career although i left disgusted by all the creepy situation happening then and still now and as i still have contacts and peers inside i can tell you that the industry is close to collapse. overall production wont even reach the million barrels a day at the end of the year and as emigration of workers continues to happen and as the pressure by the military directive continues over the oil workers, then definitely PDVSA will need to be under a thorough overhaul and revamp and privatisation. The company in general is destroyed, especially regarding its 2 strategic areas, production and refining, its close to shutdown. And well russians and chinese i doubt they will continue to pour more money into this abyss with zero return on their massive investments as the venezuelan exports to china for example could be diminished at the end of the year. Definitely a dramatic situation, which i believe none of the OPEC members are living (at least not those not under war), well not yet in Venezuela. 

[Rodent + 1,424]

14 minutes ago, jose chalhoub said:

Personally i can tell you all and thanks for jumping into the discussion and my pleasure to participate here. I worked for 13 years at PDVSA until 2016 when i left and i developed an interesting career although i left disgusted by all the creepy situation happening then and still now and as i still have contacts and peers inside i can tell you that the industry is close to collapse. overall production wont even reach the million barrels a day at the end of the year and as emigration of workers continues to happen and as the pressure by the military directive continues over the oil workers, then definitely PDVSA will need to be under a thorough overhaul and revamp and privatisation. The company in general is destroyed, especially regarding its 2 strategic areas, production and refining, its close to shutdown. And well russians and chinese i doubt they will continue to pour more money into this abyss with zero return on their massive investments as the venezuelan exports to china for example could be diminished at the end of the year. Definitely a dramatic situation, which i believe none of the OPEC members are living (at least not those not under war), well not yet in Venezuela. 

Welcome aboard! Glad to have your insider insights as to the goings on within PDVSA. 

[jose chalhoub + 388]

thank you too rodent!!! In my view, recovering PDVSA wont be that difficult, as Venezuela still has large reserves of oil. Venezuela only needs to change regime and its entire mindset, enhance and create a new and fresh environment for foreign investment, and stimulate the coming back and also the inflow of more workers properly qualified for the oil industry. I gotta remind that PDVSA was always ranked top 3 in the world like 30 decades ago more or less and was an active and sounding member of the OPEC. Now, Venezuela has sadly become the laughingstock of the organisation without any voice to influence in any decision of the organisation. Regarding the deals with Russia and China i am not in disagreement entirely, given their expertise at least from the russians in natural gas and oil. But in general, Venezuela needs to have equal partnerships with all the relevant players in the global oil and gas landscape. 

[Rodent + 1,424]

This just in:

Conoco Phillips, one of the first oil majors to bail (forfeiting its entire operation as far as I can tell) on Venezuela during the Chavez regime's oil grab, just received a judgement against PDVSA for the illegal nationalization of its assets about a decade ago. It has been around and around on this issue. Now that the judgement is in, will they ever really see this $2 billion? It may take it from Citgo.

https://www.ft.com/content/2947b36e-48b8-11e8-8ae9-4b5ddcca99b3

[jose chalhoub + 388]

The world is crumbling for PDVSA thats for sure and as long as its ruled and directed by military and is being fought in the middle of a struggle for power between the main factions inside the revolution, and not by professionals and experienced in the oil and gas sector, then i doubt things will get clear for the venezuelan state oil company. Especially critical is the refining sector here as our capacity now is less than 30% out of all refineries operating in the country, resulting in continuing shortages of gasoline in every state and city, and venezuela might close to become a net importer of gasoline. 

[Rodent + 1,424]

I thought Venezuela was already a net importer of gasoline?

[jose chalhoub + 388]

No not yet as far as i can tell. venezuelan refineries are still running around 500.000 barrels a day of oil, but still we are buying gasoline from the U.S. mainly and also we purchase oil for blendings with our heavy and extraheavy qualities of the Orinoco Belt. But quite revealing is that Amuay Cardon refining complex, once the largest refinery in the world processing around 1500000 barrels a day now it does not run 500000 barrels a day between both refineries, after many many accidents have happened there. Very sad the whole situation in the industry. 

[TraderTate + 186]

saw in Feb that refineries were running at 43%

[ronwagn + 6,290]

Cuba, Russia, China etc. all support the tyrannical government of Venezuela. What is to prevent a complete takeover and renewal of the oil production? Hopefully, our CIA etc is actively undermining such efforts and forming rebel opposition forces.Most South American countries do not want to see Venezuela stay a Cuba like dictatorship.

[HermitMunster + 146]

Comrade Putin is in control of Venezuela. What's the saying...puppet regime? Maduro/PDVSA is in hock to Russia. Putin doesn't even have to extract that sludgy oil out of the Orinoco for it to have value for Russia geopolitically. It's still not sinking in with most people, but, the U.S. dollar is dying. It's not dead yet, and I don't have any kind of prediction date for its ultimate demise, but, I've read enough to be convinced that it is only a matter of time. The U.S. won't look so smart with all of its sanctions for decades on end once it does crash and there is nobody to help.

[jose chalhoub + 388]

thank you all for your comments. Sadly PDVSA is not seeing any recovery anytime soon and well for example China might not be willing to pour money into a crashed and bankrupted country like Venezuela, and i can say this based on personal and direct experience. 

[Eric Staib + 21]

Thanks for sticking by things as long as you did, Jose.

[TraderTate + 186]

59 minutes ago, jose chalhoub said:

thank you all for your comments. Sadly PDVSA is not seeing any recovery anytime soon and well for example China might not be willing to pour money into a crashed and bankrupted country like Venezuela, and i can say this based on personal and direct experience. 

So where do you see it all going? What are the scenarios that come to your mind?

[Rodent + 1,424]

22 hours ago, Rodent said:

This just in:

Conoco Phillips, one of the first oil majors to bail (forfeiting its entire operation as far as I can tell) on Venezuela during the Chavez regime's oil grab, just received a judgement against PDVSA for the illegal nationalization of its assets about a decade ago. It has been around and around on this issue. Now that the judgement is in, will they ever really see this $2 billion? It may take it from Citgo.

https://www.ft.com/content/2947b36e-48b8-11e8-8ae9-4b5ddcca99b3

And now Maduro is saying that he hopes Conoco's win, which is less than 10% of the original award they were seeking, serves as a "tough lesson" for Conoco.

Now that's just bad sportsmanship!