Francisco Monaldi, Ph.D.

Transcription

1 Francisco Monaldi, Ph.D. Fellow in Latin America Energy Policy, Baker Institute for Public Policy, Rice University Belfer Center Associate in Geopolitics of Energy, Harvard Kennedy School Founding Director and Professor, Center on Energy, IESA, Venezuela Columbia University, CGEP, September 2015

2 Wasted opportunity. Popularity tracked consumption How bad can it get? Will the opposition win? 2

3 Wasted opportunity: The largest windfall and the worst economic performance

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5 Chavez popularity (lhs) Maduro (lhs) Real consumption growth (rhs) Source: BCV and Datanalisis

6 Public Opinion: How is the country doing? Source: Datanalisis, July

7 Public Opinion: Maduro s Approval Source: Datanalisis, July

8 Voting Intention: Legislative elections Dec Source: Datanalisis, July

9 Worrying tendencies Pragmatism or desperation? 9

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12 Venezuela will continue to produce oil until the world demands it Venezuela s official proved oil reserves are 298 billion barrels (using a 20% recovery rate on the Orinoco Belt, for 257 billion barrels). The USGS estimates that 510 billion barrels would be ultimately recoverable in the Orinoco Belt (using a 45% recovery rate). Even using a 10% recovery rate Venezuela would have the second largest reserves after Saudi Arabia, at around 190 billion barrels (close to Canada s). Reserves/production (years) Non.OPEC OPEC Nigeria United Arab Emirates Saudi Arabia Kuwait Iran Russian Federation Canada including oil sands 110 years Venezuela low estimate 190 years Venezuela US Years of production Source: BP Statistical Review of World Energy (2013) 12

13 Traditional areas and PDVSA decline. Orinoco and JVs partly compensate. Venezuela Oil Production IPD Latin America OOB Heavy and extra-heavy Conventional 13

14 PDVSA s share decreases. JVs increase. Oil Production by Ownership, Venezuela MBD Orinoco JVs Conventional JVs 23% 16% PDVSA 61% Source: Oil Ministry (PODE ); PDVSA Annual Reports, 2009, 2010, 2011 & Note 1: Since 2006 the conventional crude operative agreements transformed into Joint Ventures Note 2: Since 2007, the heavy oil strategic agreements transformed into Joint Ventures. Note 3: Production data does not include Natural Gas Liquids

15 Heavy and extra-heavy Orinoco Projects IPD estimates Chevron Gazprom/Rosneft Rosneft ENI Total/Statoil CNPC CNPC Chevron/Inpex Repsol/ONGC 15

16 EIA reports 802 kbd Ven exports to US in 2015 vs. 790 kbd in 2014, up 1.5% According to Petrologistics in the last 12 months total exports are up 4% and net exports up 1% Total imports 300 kbd, import of diluents up 40% to 140 kbd (future swaps?) North America (St. Croix included) Central America & The Caribbean Not paid in cash (kbd) Cuba 80 (from 100) Others 40 (from 80) Domestic market (Smuggling 100, Imports 150) China loans Total ~ 1.2 mbd Asia Europe South America Africa Others Cash flow production ~ 1.4 mbd of ~2.7 mbd Source: PDVSA

17 VENEZUELA Cash Flow availability PDVSA Significant contributions to FONDEN & social programs, compared to investment. Financial Debt has increased to more than US$ 45 bn. Debt with suppliers and partners above $15 bn. Debt with Central Bank above Bs. 800 bn. Arbitrations $7-8 bn. (estimate)

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19 The Reputational Legacy Texas 5 Qatar 33 United Arab Emirates 39 Colombia 48 Alberta 51 Trinidad and Tobago 58 Brazil 66 Alaska 83 Angola 118 Nigeria 124 Algeria 126 Russia 127 Libya 128 Iraq 129 Kazakhstan 131 Iran 132 Bolivia 133 Ecuador 134 Venezuela 135 Ranking sobre barreras a la inversión Fraser Institute Ranking Venezuela Jurisdicciones Consideradas

20 Productivity down, costs up Daily production per employee b/d per employee Source: PDVSA financial statements 20

21 Gasoline price: $0.07 per gallon or $0.002 at black market exchange rate. 1 cent per barrel versus $21 in Saudi Arabia Domestic subsidies: $24 billion in $13-14 bn. in

22 Worrisome trends in the oil industry: production and net exports down, limited exports cash-flow, heavier production basket, most productive fields declining, PDVSA s own-operated production collapsing. PDVSA s malaise: debt rising, investment stagnant, costs rising, and productivity collapsing. Pragmatism prevailing: Chevron contract, windfall tax exemption, exchange rate, operational control, strategic focus on extra-heavy blending, reduction in Petrocaribe and increase in US exports, etc. However, unlikely to have significant impact in the short term due to: low oil prices, cash-flow and human resources problems, and risk environment (macro-imbalances, credibility, instability, and security issues). However, if investor-friendly policies continue and the price environment / political stability help (particularly under a new government) production should reverse the negative trend. There is significant upside potential. 22

23 Thanks for your attention 23