Trinidad and Tobago: Do the Dragon Dance! Do the Maduro Dragon Gas dance!
It is noteworthy to effect a comparative analysis of the press releases of the governments of Venezuela and Trinidad and Tobago (T&T) on the sourcing of gas from the Dragon field, Sucre State, Venezuela for use in T&T. The latest instance is the negotiations that were held in Caracas, Venezuela in June 2018 which failed to produce a done deal. PDVSA’s press release on Thursday 28 June 2018 in Spanish simply stated in a single paragraph that this was simply another meeting held between both governments towards guaranteeing a supply of gas to the domestic market of T&T and “as well as the plans for gas trading in foreign markets.” What does that mean we the people of T&T simply don’t know! Apparently the Venezuelans are differentiating between gas for domestic consumption and Venezuelan gas turned into LNG and exported to foreign markets. Does this apply to methanol, urea and other products utilising gas as feedstock and exported to international markets? No answers! The press release of Thursday 28 June 2018 in English stated: “as well as the plans for gas trading in foreign markets.” That was all PDVSA’s releases stated simply the process is ongoing with no time frame for finality in sight.
In T&T the Daily Express of 28 July 2018 reported on a press statement from the Office of the Prime Minister (OPM) on the meeting in Caracas, Venezuela which stated that: “There remains a number of areas where further work is required.” The Newsday 29 June 2018 reported on the post cabinet meeting where Minister Young stated: “Right now we’re just stuck on price.” What we can surmise from the public statements made by both sides is that the Venezuelans are demanding a unit price for their gas which will be used as feedstock for export commodities sold on international markets as and especially LNG that T&T is unwilling to pay. Maduro has T&T by the short and curly magnified by the geopolitical reality impacting this gas supply deal. Maduro has everything to gain especially leverage over T&T and we have everything to lose which trumps what we delusionally believe we have to gain.
Can Maduro supply the gas? In light of the condition PDVSA is in as at July 2018 NO! After his electoral victory in May Maduro suddenly became very proactive after a first term of handwringing whilst austere neoliberalism is applied with a vengeance combined with prolific printing of paper money, intense State suppression of the poor and underclass and looting the State coffers on an industrial scale. The Maduro sorcerer’s apprentice model of survival at all costs political alchemy. One such proactive action was to meet with the leaders of the workers’ movement of PDVSA in a televised meeting to hear the workers’ position on why oil production in PDVSA had now collapsed to below 1.1 million barrels per day since April 2018 from 2.5 million barrels per day in late 2016 and how to raise production levels. Oil worker Ernesto Guerra stated: “We can recuperate up to 80% of lost production within six months to a year…if we are given the tools, materials, supplies and, minimal things which we need.” Guerra has therefore indicated that the dramatic fall in production is an expression of the systematic collapse of PDVSA as a wealth generating enterprise under the leadership of Maduro. Other workers indicated that the plant and equipment of PDVSA needs to be upgraded which illustrates the failure to invest in the necessary upgrades and the bureaucratic barriers erected must be dismantled. PDVSA is then a lumbering political dinosaur effectively neutered and plundered as a feeding trough to the point where what is necessary to breathe life into it is outside of the capacity of the politicians who contributed to its demise. PDVSA today simply does not command the resources to develop the Dragon and other gas fields of offshore Sucre state and much less to erect the infrastructure to connect to the infrastructure on the T&T side of the sea boundary. To do this they need an external source of funding in order to meet the start-up of supply date being bandied about in the media. The question is if this legal and permissible under the organic hydrocarbon law of Venezuela?
The immediate strategic imperative is to raise PDVSA’s daily oil production by 1 million barrels per day as follows: 360,000 barrels per day of light crude from 13, 345 category 11 wells in Western Venezuela and 700,000 barrels per day of heavy crude from 9,500 wells from the Orinoco Belt. This strategic imperative has to be implemented on the ground where PDVSA is in the grips of a severe cash flow crisis, is owing its service providers both locally and internationally, faced with debilitating US sanctions especially those which preclude the repatriation of CITGO’s profits to Venezuela and most importantly with a crushing USD debt load in 2018 and 2019. To this must be added the collapse of the infrastructure of PDVSA and in depth politicisation of the management of PDVSA where it is now paralysed from top to bottom exemplified in the assault on corruption where a general of the Guardia Nacional is now president of PDVSA and minister of energy. On the 4 July 2018 Correo del Orinoco carried a news report which indicated that China had agreed to a specific financing credit facility of USD 5 billion to fund the project to raise the production of oil in Venezuela especially in the Orinoco oil belt. The Development Bank of China has also agreed to a specific financing credit facility to PDVSA to increase oil production of USD 250 million. Trump’s war on China leaves little free space for China to secure a supply of oil free from the machinations of the US hence the dance with a collapsed PDVSA. Two press releases of PDVSA dated the 5 and 6 July 2018 indicated that the capital injection of China into oil production will be aimed at increasing oil production in China/Venezuela joint venture companies where the CNPC of China will take on the leading role for China in this China financed venture. China has no presence in the Dragon field and has yet to exhibit concern with Venezuelan offshore gas as an investable interest and the other fields adjoining Dragon are under a joint venture with Rosneft of Russia.
The Correo del Orinoco of 3 July 2018 reported that Gazprom was now working with PDVSA in Zulia State to restore a reliable supply of electricity and steam to the oilfields of Zulia necessary to increasing production via reliable secondary lift. China and Russia are then active in the effort to increase oil production in Venezuela today in the face of the collapse in oil production of PDVSA. An involvement that is a strategic imperative in response to the Trump end game that only Trump seems to know. A press release from PDVSA dated 4 July 2018 reported that 11 service agreements with nine service companies were signed for work on wells in the oilfields of Western Venezuela in Zulia and Trujillo States. The identity of the nine companies were not revealed in the press release but it is clearly apparent that the increase in oil production is the sole strategic aim of PDVSA right now and until it is accomplished.
Where does Dragon gas for T&T fit into this strategic imperative for a nation in economic meltdown and PDVSA in crisis to which Venezuela is addicted? PDVSA is now Venezuela’s pusher man in crisis as the pusher man cannot supply what the addict named Venezuela craves for hence the Maduro diet for all except the bolibourgeoisie and the Punto Fijo oligarchs.
Whilst we sing optimistic songs in public driving the Dragon dance the issue is not only if the gas materialises in spite of signing a contract but what price will we pay geopolitically to the parties on both sides of the divide? How costly will be the pounds of flesh extracted by parties on both sides of the divide? The propensity for grave damage is a likely possibility!
To hitch your wagon to this disaster waiting to happen thereby risking geopolitical blowback coupled with no gas deliveries indicates that all is not as portrayed in the reality of T&T on the ground. This is desperation in action, delusion or desperate delusion?