First this news that PDVSA will not be able to use a termina oil, the one in the island of St. Eustatius. Why? They owe 26 million dollars. When a major oil company cannot pay 26 million dollars of docking fees you know that something is deeply wrong.
Of course, the election has boosted confidence in investors. Not! There is the quote today:
Note that the DICOM for travel has risen to 11,000, 3 times the "implicit" dollar which the ration between "declared" reserves and money liquidity. That is the printed money. So the regime is recognizing that it is a liar about either the reserves or the liquidity, or both since in theory the regime managed DICOM should be around the implicit dollar. Then again the regime has all but stopped DICOM...
The one a Friday ago was 29,173, but who cares if the drop in one week was around 30% of its value. No?
So there you are, the real victors of the regime elections: economic collapse and misery. But the regime could not possibly care less, let them it cake and cure themselves with wild herbs infusions. If they can find cooking gas....
I have read and appreciated your comments and perspective for many years now about the situation in Venezuela. thanks for your insights, very valuable to me.
ReplyDeleteWhat I dont understand is why the venezuelan people STIILL dont understand or accept the fact that dictators arent going to lose elections or give up power.
how many years have we wasted by the "leaders" of the opposition complaining, giving more press conferences etc and what have we gained?? we are much worse than before.
Worse because at the first of this year when all the people were in the streets and around 150 people(mostly youth) lost their lives for the cause, gaining mommentum and putting pressure on maduro, the oppo leaders were still against it and then henry allups sellout completely destroyed all the progress made.
It is just so frustrating to see all the suffering and crisis and the oppo leaders have another conference or another meeting everyday prolonging the inevitable.
George you use to much common sense so I am going to reply to you as the owner of this blog would: you are an idiot and an a-hole. (And probably accused of being homophobic too)
DeleteNo Rosa, the idiot is you. George expresses himself very well, thoughtfully, deserving of a real reply and not a put down.
DeleteGeorge
Deletethe problem is complex.
First, the opposition has no weaponry. Only vote is what we have, for better or worse.
Second, the army has been deeply corrupted, at least at the top tier. Thus there have no interest in bringing down a system that has been so good for them. NOTE: I am anti military since ever, I am just addressing a coup as the issue that many would like to have. It will not happen.
Third, the regime is held by a gang of drug lords. These people develop a different system of neuronal connexions. They do not think like us.
Daniel, I have been involved in selling into the Oil & Gas industry all of my adult life. As people within the industry (and a great many outside the industry) know, PDVSA has basically been gutted by the parasitic actions of the Chavez/ Maduro regimes. The failure to reinvest in their producing fields and equipment has resulted in rapidly declining production from existing wells along with fewer and fewer new wells being brought online. Brent crude is at 57 dollars right now and West Texas Intermediate which is a benchmark for U.S. produced oil is at 51 dollars. Another problem for PDVSA is that much (most) of their crude production is a very heavy low grade crude oil that is also often sour which means it contains H2s hydrogen sulfide. All of this means that most of their production brings a much lower price than light, sweet crude.I guess what I am saying is that unless the dictatorship or an outside entity starts pumping some money back into the company the "cash cow" may soon go dry.
ReplyDeleteMoney? What money?
DeleteBut destroying production is part of the regime's plan. Make it extremely financially bleak then in trade for payments the Russians will start confiscating all the oil assets.
DeleteTo put this in perspective, PDVSA claimed to be producing 3.4 million barrels shortly after Chavez came to power. Today it is 1.9 million. Texas Permian and Eagle Ford alone produce 3.8 million. PDVSA is going backwards. And with sanctions creating financing and cash flow issues for PDVSA, it can only get worse.
DeleteAs an aside, Robert Mugabe was just appointed as an ambassador to WHO. Is that Maduro in 15 years?
The PDVSA cash cow may soon go dry but if Daniel is correct the drug pipeline is the one sustaining the regime. It appears to be a simpler technology (smuggling only involves people producing and moving the merchandise). Maybe we should focus on finding ways of crippling that cash cow (legalization anyone?)...
DeleteWhen a major oil company cannot pay 26 million dollars of docking fees you know that something is deeply wrong.
ReplyDeleteYup.
But PDVSA's not paying its bills has been going on for years, well before the 2014 fall in the price of oil. From 2010: Venezuela to nationalize U.S. firm's oil rigs. Nationalize instead of paying the bills.
Venezuela will nationalize a fleet of oil rigs belonging to U.S. company Helmerich and Payne, the latest takeover in a push to socialism as President Hugo Chavez struggles with lower oil output and a recession.
The 11 drilling rigs have been idled for months following a dispute over pending payments by the OPEC member’s state oil company PDVSA. Oil Minister Rafael Ramirez said on Wednesday the rigs, the Oklahoma-based company’s entire Venezuelan fleet, were being nationalized to bring them back into production.
Regarding how lack of access to an oil terminal will play out in future months is for someone wiser than me to predict. We know from Cuba, Zimbabwe, and North Korea that regimes can survive poor economies.
26 millions is nothing for an oil company. That is why we can imagine a PDVSA worse than expected.
DeleteAs for the regime surviving, I think this is now the working hypothesis. And the consecutive decisons that civilians must take.
"let them it cake"? You know how that story ended. When I think that Lacava is already a shorty. Hummm!
ReplyDeleteI remember well when Venezuela seized the drilling rigs from H&P rather than pay the bill. I suppose I was hoping that the possible collapse of PDVSA could possibly be the catalyst for the collapse of the Maduro regimes...but as Boludo Tejano pointed out, other dictatorships have survived with even less resources than Venezuela.
ReplyDelete"Note that the DICOM for travel has risen to 11,000,..."
ReplyDeleteDaniel the only one reporting this number is DolarToday.
Everyone else including ItalCambio yesterday in Sambil, Margarita are reporting Bs.3.445 to US$1.
I think that's the official rates for things like CC transactions and excgange not Bs.11.000.
That is what you pay when you go through a "contact"
DeleteGlenn:
ReplyDeleteAs an aside, Robert Mugabe was just appointed as an ambassador to WHO. Is that Maduro in 15 years?
His appointment has been rescinded.Sometimes, just sometimes, the UN has standards. More the UN norm is when countries like Saudi Arabia and Venezuela sit on the UN Human Rights Commission.
Further PDVSA problems, as PDVSA continues its ongoing campaign to make YPFB look good by comparison. Venezuela's deteriorating oil quality riles major refiners.
ReplyDeleteCARACAS/HOUSTON (Reuters) - Venezuela’s state-run oil firm, PDVSA, is increasingly delivering poor quality crude oil to major refiners in the United States, India and China, causing repeated complaints, canceled orders and demands for discounts, according to internal PDVSA documents and interviews with a dozen oil executives, workers, traders and inspectors.
The disputes involve cargoes soiled with high levels of water, salt or metals that can cause problems for refineries, according to the sources and internal PDVSA trade documents seen by Reuters.
The quality issues stem from shortages of chemicals and equipment to properly treat and store the oil, resulting in shutdowns and slowdowns at PDVSA production facilities, along with hurried transporting to avoid late deliveries, the sources said.
U.S. refiner Phillips 66 (PSX.N) canceled at least eight crude cargoes because of poor oil quality in the first half of the year and demanded discounts on other deliveries, according to the PDVSA documents and employees from both firms. The canceled shipments - amounting to 4.4 million barrels of oil - had a market value of nearly $200 million.
Among the causes listed are deferred maintenance, lack of cash to purchase necessary chemicals, and equipment theft. While lack of cash is relatively recent, deferred maintenance and equipment theft have been going on ever since Chavez took over PDVSA in 2002-03.
Another point is that this is harming PDVSA's being able to sell crude for cash money.
More troubling for PDVSA is that the quality issues are cutting into its ability to sell crude for cash; the firm already delivers about 40 percent of its oil to Chinese and Russian firms as payment on more than $50 billion in loans from those nations.
Chavismo has come close to killing the golden goose that pays for the Petrostate of Venezuela.