Donald Trump has said he might block ExxonMobil from investing in Venezuela after the oil company’s chief executive called the country “uninvestable” during a White House meeting last week.
“We can’t invest there”
“I’ll ban you from investing there!”
Hmm…..
Or
“We’ll only invest in Venezuela if you bung us some Dosh.”
From way from the bottom of the article ( as usual with the Groan…) seems it’s not so much ” Gi’s some Dosh! “, but “We want to get our Past Losses ( and court costs, and…) back first, *then* we’ll think about re-investing..”
So yeah…. Looks like they want money up-front first, but it’s not a simple Bung us some Dosh.
I can see why they want some better guarantees though… Nothing stops Venezuela doing a 180 in a couple of years and vote in someone along the lines of Chavez/Maduro..
Then again…..
You can argue that *is* a basic level of Risk when it comes to South-America, and has been for…. Hell it’s been a running joke/setting in comics and movies since forever… it’s a Trope in and of itself nowadays…
So I can see why Trump feels that their past losses are “part of doing business there”, same as that he would have had to deal with the
MobstersUnions when he was doing Real Estate in New York..ExxonMobil have a point. Apparently, Orinoco crude’s extraction costs are c.10x the extraction costs of Saudi crude, and, if so, with oil at c.$60 a barrel, Orinoco crude is almost worthless. And then there are the security costs of operating in a mafia state.
That said, full marks to Trump for action on Venezuela – not to mention Cuba, Iran and Gaza…
If extraction costs are so high, how was Venezuela able to provide free oil to Cuba and below-market oil to China? How was the shortfall made up? And is it conceivable that Trump didn’t know the extraction costs and business viability before this plan was formulated?
Either way, it’s all shut down now so the world benefits from this tap being turned off. Next: Cuba’s collapse, unless some other free-oil supplier steps into the gap. Who might that be? Iran? Russia? Why?
There is a lot of ruin in a nation.
It’s possible that Chavez and Maduro were running the refineries at a “loss” if this meant they could exchange the oil for weapons to provide their soldiers and something to pay them with.
I put “loss” in quotes because it wasn’t a loss to them, it provided something they valued more.
If extraction costs are so high, how was Venezuela able to provide free oil to Cuba and below-market oil to China?
Because the oil price has been well above $60 a barrel until recently – except for dips in 2016 and 2020, IIRC. In mid-2022(?), the price was over $120.
And is it conceivable that Trump didn’t know the extraction costs and business viability…
Unlikely. He’s probably looking to an upturn in the price. Also, most of the US refining capacity is set up for heavy crude with – I believe – the biggest refineries being on the Gulf of Mexico, to which access from Venezuela is easier/cheaper than from Canada or Saudi.
If I remember correctly, Saudi crude is so light, you merely need to drill a hole in the right place and the stuff comes gushing out.
Most other places you need to put in “a bit” more effort to get the black stuff up.
So comparing with Saudi crude for relative extraction costs might not be the best way to go about it…
You are thinking of the lighter Saudi grades like Arabian Light or Super Light. The large fields like Manifa Bay produce Arabian Heavy, which is much cheaper to extract than Orinoco heavy crude.
Apparently Exxon has already suffered two rounds of confiscation in Venezuela. So maybe they are looking after their shareholders’ interests.
Yes multi billion dollar investments that take minimum 20 years to go into positive returns. It doesn’t really matter what a 2nd term US president says.
Normally I’d laugh but wheeler dealing like this is in the Donald’s blood.
The US has just told its citizens to leave Venezuela immediately and stuck the highest level 4 “Do Not Travel” alert on the country. Not an entirely encouraging investment scenario.
Did Trump just pull off the most amazing trick shot and snooker himself in the process?
Time will tell.
Isn’t this “Calling their bluff?