francisco monaldi, ph.d. - center on global …energypolicy.columbia.edu/sites/default/files/monaldi...
TRANSCRIPT
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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
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Wasted opportunity. Popularity tracked consumption How bad can it get? Will the opposition win?
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Wasted opportunity: The largest windfall and the worst economic performance
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4
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-25-20-15-10-50510152025
25
35
45
55
65
75
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Chavez popularity (lhs)Maduro (lhs)Real consumption growth (rhs)
Source: BCV and Datanalisis
Chart1
76.84.62873574236571
55.91.552677601436661
60.62.096178423436753
60.610.260329004136845
62.76.259012293736937
62.79.678833273437026
55.85.124226857537118
55.83.316855847237210
34.4-0.484859128137302
44.7-7.305947416237391
32.7-4.464640676237483
32.6-15.136811109137575
35.1-12.384983438337667
36.8-6.875622574837756
30.8-4.175692236537848
41.56.590293502537940
41.415.745791448838032
43.314.553266670838122
50.815.37113030538214
65.416.063357015738306
64.213.633296993538398
71.215.971322469238487
70.114.120643548938579
67.618.709747560338671
73.614.000388146438763
75.414.642666755338852
72.800000013116.627357392138944
66.316.27274093639036
67.417.990170518739128
63.116.46142556939217
6019.624713820239309
5213.915472714239401
51.88.314660753139493
55.59.490182373139583
58.45.067946871839675
57.33.132940418339767
612.150574852339859
53.2-2.753161931839948
57.3-4.391479809740040
50.8-6.00158898440132
42.6-4.782648119240224
48-1.419024988840313
50.5-1.842062816740405
47.70.386228973540497
53.93.610370901240589
512.711995988740678
494.373033058840770
52.85.27469378940862
62.55.947390861740954
627.135988516741044
577.835326651157
687.085064890654
71.63.328984650248
414095.346898907846
415014.272087965845
415935.781316615550
4168541
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Chavez popularity (lhs)
Real consumption growth (rhs)
Maduro (lhs)
Sheet1
Chavez popularity (lhs)Real consumption growth (rhs)Stack 6Stack 7Stack 8Totals (invisible)Stack 9Stack 10Stack 11Stack 12Stack 13Stack 14Stack 15Stack 16
36571.076.84.63
36661.055.91.55
36753.060.62.10
36845.060.610.26
36937.062.76.26
37026.062.79.68
37118.055.85.12
37210.055.83.32
37302.034.4-0.48
37391.044.7-7.31
37483.032.7-4.46
37575.032.6-15.14
37667.035.1-12.38
37756.036.8-6.88
37848.030.8-4.18
37940.041.56.59
38032.041.415.75
38122.043.314.55
38214.050.815.37
38306.065.416.06
38398.064.213.63
38487.071.215.97
38579.070.114.12
38671.067.618.71
38763.073.614.00
38852.075.414.64
38944.072.800000013116.63
39036.066.316.27
39128.067.417.99
39217.063.116.46
39309.06019.62
39401.05213.92
39493.051.88.31
39583.055.59.49
39675.058.45.07
39767.057.33.13
39859.0612.15
39948.053.2-2.75
40040.057.3-4.39
40132.050.8-6.00
40224.042.6-4.78
40313.048-1.42
40405.050.5-1.84
40497.047.70.39
40589.053.93.61
40678.0512.71
40770.0494.37
40862.052.85.27
40954.062.55.95
41044.0627.14
41136.0577.8457
41228.0687.0954
41320.071.63.3348
41409.05.3546
41501.04.2745
41593.05.7850
41685.041
41774.037
41866.035
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6 Source: Datanalisis, July 2015
Public Opinion: How is the country doing?
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7 Source: Datanalisis, July 2015
Public Opinion: Maduros Approval
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8 Source: Datanalisis, July 2015
Voting Intention: Legislative elections Dec. 2015
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Worrying tendencies Pragmatism or desperation?
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10
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Venezuela will continue to produce oil until the world demands it Venezuelas 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 Canadas).
0 50 100 150 200 250 300
US
Venezuela
Russian Federation
Iran
Kuwait
Saudi Arabia
United Arab Emirates
Nigeria
OPEC
Non.OPEC
Years of production
Reserves/production (years)
Source: BP Statistical Review of World Energy (2013)
Canada including oil sands 110 years
Venezuela low estimate 190 years
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Traditional areas and PDVSA decline. Orinoco and JVs partly compensate.
OOB Heavy and extra-heavy
Conventional
Venezuela Oil Production IPD Latin America
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0
0.5
1
1.5
2
2.5
3
3.5M
BD
Oil Production by Ownership, Venezuela 1990-2013
61%
Orinoco JVs
Conventional JVs
PDVSA
Source: Oil Ministry (PODE 2007-2008); PDVSA Annual Reports, 2009, 2010, 2011 & 2013. 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
23%
16%
PDVSAs share decreases. JVs increase.
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Heavy and extra-heavy Orinoco Projects IPD estimates
CNPC
Total/Statoil
Rosneft
Chevron
Repsol/ONGC
Chevron/Inpex
CNPC
ENI
Gazprom/Rosneft
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Not paid in cash (kbd) Cuba 80 (from 100) Others 40 (from 80) Domestic market 700-750 (Smuggling 100, Imports 150) China loans 350-400 Total ~ 1.2 mbd Cash flow production ~ 1.4 mbd of ~2.7 mbd
Source: PDVSA
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?)
0 200 400 600 800 1000 1200 1400 1600 1800
Others
Africa
South America
Europe
Asia
Central America & The Caribbean
North America (St. Croix included)
2012 2011 2010 2009 2008 2007 2006
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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)
Cash Flow availability PDVSA
VENEZUELA
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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
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The Reputational Legacy
Ranking sobre barreras a la inversin Fraser Institute 2009 2010 2011 2012 2013 2014
Ranking Venezuela 141 132 135 146 157 156Jurisdicciones Consideradas 141 133 135 147 157 156
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26.14
0.00
20.00
40.00
60.00
80.00
100.00
120.00
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
b/d per employee
Daily production per employee
Source: PDVSA financial statements
Productivity down, costs up
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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 2013. $13-14 bn. in 2015
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Worrisome trends in the oil industry: production and net exports down, limited exports cash-flow, heavier production basket, most productive fields declining, PDVSAs own-operated production collapsing.
PDVSAs 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.
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Thanks for your attention
Twitter: @fmonaldi
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mailto:[email protected]:[email protected]
After the Party, the Hangover:Venezuela in the midst of the oil price collapse Politics and EconomicsSlide Number 3Unsustainable path even before the oil price collapsePopularity tracked consumption Slide Number 6Slide Number 7Slide Number 8The Oil IndustryHigher oil dependence, with declining net oil exportsThe Rise and Fall and Rise again and Fall again of the Venezuelan Oil IndustrySlide Number 12Slide Number 13Slide Number 14Slide Number 15Declining production, declining exports, and more than a third of total production is not paid forSlide Number 17Slide Number 18Fraser Institute Global Petroleum Survey 2011: Jurisdictional rankings according to the extent of investment barriers(based on All-Inclusive Composite Index values) 135 jurisdictions rankedSlide Number 20Venezuela Domestic Oil ConsumptionConclusionsSlide Number 23