venezuela - an inside view from a personal perspective...increasing homicide rate since 1995! in...
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VENEZUELA - An inside view from a
personal perspective
November 19, 2014
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A BBC broadcaster described once sitting next to Churchill as he gave a
speech, keeping his audience hanging on to his every word.
The broadcaster noticed, however, that what appeared to be notes in
Churchill's hand was only a laundry slip, and he later remarked upon this
to Churchill. 'Yes,' said WSC. 'It gave confidence to my audience.'
Confidence in the speaker
Thomas Tillbert 2014-11-18
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Talking about the audience…..
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What are we going to talk about?
Foreign influence
Corruption
Security
Risk of default
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Foreign influence - Looking for friends
and the Chinese Dragon
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Foreign influence - Looking for friends
the Chinese Dragon and an Emperor
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Speed dating or real synergies?
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Foreign influence
Since 2001 Venezuela and China have signed
480 cooperation agreements and participated in
143 joint projects. From 2005 – 2012 China lent
Venezuela US$47 billion, accounting for 55% of
Chinese credit issued to South American nations
in that period.
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Foreign influence
This particular meeting on July 22 this year,
38 agreements worth 18 billion USD were signed.
Includes a 4 billion USD loan.
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Foreign influence: Real partnership?
How is it paid?
In oil obviously….
500 kbd is going to China according to Venezuelan export statistics.
Chinese import statistics is only showing half of that…….
The rest is traded all over the world. How is that explained?
The Chinese relationship is very important and you cannot criticize the setup…
Who is screwing who??
If you don’t get the one you love you have to love the one you get…..
Thomas Tillbert 10 2014-11-18
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Foreign influence: The Russian Bear
Thomas Tillbert 11 2014-11-18
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“President Chavez always had a great respect and love towards
Russia. And we inherited this love for Russia. And we came here
to confirm our wish to strengthen and broaden our strategic
alliance with Russia,” Maduro replied. July 2013
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But why this love affair?
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A marriage of convenience
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A marriage of convenience
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According to the Center for the Analysis of World Arms Trade, Venezuela is to be ranked second
in Russia's arms exports in 2012-2015, following India, with the purchasing volume of $3.2 billion.
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So what happened?
Thomas Tillbert 17 2014-11-18
The National Oil Consortium (NOC) was set up in October 2008 as part of efforts to expand economic
cooperation between Russia and Venezuela on the initiative and with the direct involvement of Igor
Sechin, who at the time oversaw Russia’s fuel and energy industry in his role as Deputy Prime Minster.
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Foreign Influence - Russia
Principally all Russian oil companies were ordered to create a Russian
Consortium participating with 20 billion USD in the Junin-6 oil block
under the leadership of Rosneft.
Lukoil, Surgotneft,TNK-BP,and Gazprom Neft had the rest.
However, later Rosneft agreed to buy out Surgotneft, TNK-BP(merger)
and Lukoil. ( I guess now with regrets)
Why? (“This is not a project of a high priority for us” said Vagit Alekperov, Lukoil’s president )
The venture aims to produce 450,000 barrels a day at peak production
in 2018 after years of enormous investments…..
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Foreign Influence-Russia
Some oil is obviously being
produced in Petromiranda.
Another Russian venture is
Petrozamora, where 70 kbd
is being produced
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Corruption
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Corruption
One of the 10 highest in the world
Unfortunately widely spread when civil servants are underpaid and there is no
rule of law.
Natural for an oil nation???
Mostly in procurement. Curtails efficiency and productivity.
When things cannot be explained….which happens…..
Three Examples : Bandes / Direct Access Partners, Trading, Drugs
The DoJ brought criminal charges against a number of individuals linked to Direct Access Partners, a New York broker-dealer, for allegedly
paying bribes to a representative of Bandes, the Venezuelan state-owned bank, for directing business to the broker-dealer. The bank
employee who received the bribes was also charged and pleaded guilty.
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Security
Venezuela has the second-highest homicide rate in the world
Venezuela is the only country in South America that has had a consistently
increasing homicide rate since 1995!
In 2013, just 19% of the Venezuelan adults felt safe walking alone at night in
the city
Just 26% of Venezuelans expressed confidence in the local police
22% reported that money had been stolen from them or another household
member in the last 12 months
Nynas representatives have been robbed twice during the last 12 months at
gunpoint
Business partners escaped a kidnapping attempt 3 months ago in Maracaibo
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Security
But still there is one country that is worse!
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Risk of default
Venezuela's oil revenues account for about 95 per cent of export
earnings
A Venezuelan crude basket under 85USD puts the country’s finances
under extreme pressure
Arbitration with Gold Reserves, Exxon and Connoco Phillips doesn’t
help
Increasing imports of gasoline and diesel
Standard & Poor’s downgraded the country’s credit rating to CCC+ and
argued that there was a 50 per cent chance of a default over the next
two years.
Black market rate of Bolivars now at 100 to the USD
Shortage of practically everything
Inflation at 60%
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Risk of default
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“Please do not panic, things will fix itself, “OPEC Secretary General Abdulla al Badri
“We are not seeing the price issue as a major issue that we need to panic about,”
UAE energy minister Suhail bin Mohammed al-Mazroui
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Risk of default
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Talk to your friends……….
Thomas Tillbert 30 2014-11-18
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Does it matter?
Thomas Tillbert 31 2014-11-18
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Risk of default
PLATTS: Venezuelan oil basket falls $1.75/barrel to $75.90/b this week
Independent analysts predict that if oil prices stay or continue to fall, a default
is a reality within 24 months
The government would do everything possible to avoid a default.
A default would basically shut down external financing sources.
Does it matter for the world?
Why have they not hedged?
But can it get worse for the Venezuelans? Yes!!!!
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Summary:
How can we describe today’s Venezuela?
Like this?
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Summary:
How can we describe today’s Venezuela?
Flashback to the Soviet union:
Bureaucracy
Exchange control
Lack of goods
No rule of law
Denial of truth …(production, arbitrations, security)
But:
More democracy
Better food (an upstream example)
PDVSA versus Aeroflot
Nice country
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Summary:
How can we describe today’s Venezuela?
Thomas Tillbert 2014-11-18
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Summary:
How can we describe today’s Venezuela?
Venezuela can today, in my view,
only be characterized as “hooki”
“A cow falling over but not dying”
Thomas Tillbert 2014-11-18