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In Venezuela's murky oil industry, the deal that went too far

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  • In Venezuela's murky oil industry, the deal that went too far

    Even for Venezuela's notoriously opaque economy, it was a sweetheart deal that went too far.

    Last August, state oil company Petroleos de Venezuela SA issued one of its largest tenders in recent years: a multi-billion dollar project in the Orinoco Belt, the world's largest crude reserve. The project was designed to shore up the OPEC country's stagnating oil production and ease an economic crisis.

    Then, out of the blue, a tiny Colombian trucking and trading firm with no relevant experience beat global industry leaders to win the contract, worth around $4.5 billion according to one PDVSA [PDVSA.UL] document. Alarm bells rang among PDVSA's foreign partners, which include Chevron (CVX.N) and Rosneft (ROSN.MM).
    Reuters - Full Article

    How long can Venezuela hold on at this rate?

  • #2
    I haven't had any dealings with the Venezuelan oil industry since just before Chavez came to power (and now retired not likely to) but it seems very little has changed. It was just as murky then. But what's special about Venezuela? - Petrobras just as bad.
    Human history becomes more and more a race between education and catastrophe (H G Wells)
    Mit der Dummheit kaempfen Goetter selbst vergebens (Friedrich von Schiller)

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    • #3
      Originally posted by MarkV View Post
      I haven't had any dealings with the Venezuelan oil industry since just before Chavez came to power (and now retired not likely to) but it seems very little has changed. It was just as murky then. But what's special about Venezuela? - Petrobras just as bad.
      I imagine its because of the state of the Venezuelan economy and what looks like the growing possibility of social collapse there.

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      • #4
        Originally posted by MarkV View Post
        I haven't had any dealings with the Venezuelan oil industry since just before Chavez came to power (and now retired not likely to) but it seems very little has changed. It was just as murky then. But what's special about Venezuela? - Petrobras just as bad.
        Pemex ain't much better... if it's better...
        Watts Up With That? | The world's most viewed site on global warming and climate change.

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        • #5
          Originally posted by Daemon of Decay View Post
          I imagine its because of the state of the Venezuelan economy and what looks like the growing possibility of social collapse there.
          It's more like a social implosion into a black hole...
          Watts Up With That? | The world's most viewed site on global warming and climate change.

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          • #6
            Originally posted by The Doctor View Post
            It's more like a social implosion into a black hole...
            Considering the lack of toilet paper, black hole is right.

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            • #7
              Originally posted by The Doctor View Post
              Pemex ain't much better... if it's better...
              It's a bit better. The opening up to foreign competition was an interesting move - as flawed and incomplete as it has been.

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              • #8
                Originally posted by The Doctor View Post
                Pemex ain't much better... if it's better...
                Our Houston office used to talk to them - problem was the Houston office was unique - didn't know diddly squat about oil!
                Human history becomes more and more a race between education and catastrophe (H G Wells)
                Mit der Dummheit kaempfen Goetter selbst vergebens (Friedrich von Schiller)

                Comment


                • #9
                  Originally posted by Daemon of Decay View Post
                  It's a bit better. The opening up to foreign competition was an interesting move - as flawed and incomplete as it has been.
                  Pemex did not want to do this. Pres. Nieto pushed for it.
                  Watts Up With That? | The world's most viewed site on global warming and climate change.

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                  • #10
                    Originally posted by MarkV View Post
                    Our Houston office used to talk to them - problem was the Houston office was unique - didn't know diddly squat about oil!
                    So... They had something in common with Pemex...
                    Watts Up With That? | The world's most viewed site on global warming and climate change.

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                    • #11
                      Originally posted by The Doctor View Post
                      Pemex did not want to do this. Pres. Nieto pushed for it.
                      Sure, but that's irrelevant - they had to do it, despite it opening up competition to the state. Competition is one of the great poisons for corruption.

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                      • #12
                        Originally posted by Daemon of Decay View Post
                        Sure, but that's irrelevant - they had to do it, despite it opening up competition to the state. Competition is one of the great poisons for corruption.
                        It's relevant to Pemex. They won't fare well against real competition. All of the blocks that were offered up for bidding were pre-screened and released by Pemex. Although, Pemex's track record makes it very likely that some of what they released will yield significant discoveries.

                        If the Mexican government truly embraces outside competition against Pemex, they could see a major revival in their oil production and revenue.
                        Watts Up With That? | The world's most viewed site on global warming and climate change.

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                        • #13
                          Originally posted by The Doctor View Post
                          It's relevant to Pemex. They won't fare well against real competition. All of the blocks that were offered up for bidding were pre-screened and released by Pemex. Although, Pemex's track record makes it very likely that some of what they released will yield significant discoveries.

                          If the Mexican government truly embraces outside competition against Pemex, they could see a major revival in their oil production and revenue.
                          Oh that's one of the great mysteries. I was at a get together between Pemex and some American LNG/NG companies last month, and one of the questions I heard was why Pemex would risk competition when it had control over the market and the proceeds of which were used to prop up state activities.

                          Still, the big decider will be next year when they really open up their markets.

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                          • #14
                            Originally posted by Daemon of Decay View Post
                            Oh that's one of the great mysteries. I was at a get together between Pemex and some American LNG/NG companies last month, and one of the questions I heard was why Pemex would risk competition when it had control over the market and the proceeds of which were used to prop up state activities.

                            Still, the big decider will be next year when they really open up their markets.
                            Wells will be drilled next year on the Mexican OCS by Pemex's new competitors.

                            Watts Up With That? | The world's most viewed site on global warming and climate change.

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