By Rich Kozlovich
Geopolitical Futures, (a subscription site I heartily recommend) it appears President Maduro's Venezuealan govenment, who unendingly blames western capitalists for Venezuela’s unbelievable poverty and privation, has now decided that ConocoPhilips may be allowed to take over “refineries and terminals owned by the Venezuelan state-owned oil company on the island of Curacao, a constituent nation in the Kingdom of Netherlands, which would include “include an oil terminal and a refinery with ….. a capacity to produce 335,000 barrels per day.”
Venezuela also has oil storage tanks on St. Eustatius island, a Special Municipality of the Netherlands, and an export terminal that can handle 10 million barrels on Bonaire island, which is also a Special Municipality of the Netherlands.
Now, I will be the first to admit I don’t understand this Netherlands link as it exists today with Kingdom of Netherlands islands versus Special Municipalities but it’s important to the story because it makes it clear they’re not controlled by the government of Venezuela and most importantly - they’re prosperous.
Geopolitical Futures notes: Venezuela's oil "company accounts for roughly 16 percent of Venezuela’s refined oil exports and 70 percent of its crude oil exports. But Venezuela has recently limited oil extraction, and refineries are operating at just above 30 percent capacity. In December, about 80 percent of Venezuela’s refineries halted operations.”
In short – Venezuela’s socialist government has been totally incompetent with their assets no matter where they’re located, and they’re losing huge amounts of money, but what happens if they give up these assets?
First, I’m not sure what’s moving Venezuela to do this, other than they’re hoping those dirty capitalists can find a way to increase production and they can cut a deal for some of the profits. And since it’s clear these assets are going down the tubes under their control, a little bit of something is better than a whole lot of nothing.
Not only is Venezuela’s oil heavy with contaminants making refinement expensive, but the bulk of their oil reserves are part of the Orinoco Belt containing an estimated 1.2 trillion barrels of oil resource and it’s reported this oil is expensive to produce.
To produce this oil takes billions in investment and high oil prices or it isn’t worth it. The oil companies made those investments, but that was when the oil prices were high. As is the case with all socialists, Chavez wanted more of what they didn’t work to produce, demanding the oil companies make changes to their agreements and give majority control to the state-owned oil company.
Total, Cheveron Statoil and BP agreed, but ExxonMobil and ConocoPhillips refused and their “assets were expropriated – another word for stolen. But once again, Venezuela’s oil is very heavy with contaminants and most refineries don’t want it. Will that change? I don’t think so, but even if it did, it really doesn’t matter?
No matter what deal they work out, if any, it’s too late. The people are starving and the entire structure of the nation is a mess in every sector, including its medical care, which must now be categorized as a horror story.
It’s going to take years to fix this mess and the only real hope for Venezuela isn't an oil deal with those dirty greedy capitalist oil companies - it's an outright overthrown of Maduro and his theives, thugs and henchment, bringing a new government into being that is willing to beg those dirty U.S. capitalists to bring them out of the abyss of socialism and just feed them.