‘The US-Venezuela oil deal? It’s perfect – but only for Washington’
Geologist Irúa Euribe, formerly of PDVSA, outlines the risks to Caracas posed by the oil deal announced by Trump
There’s no doubt about it: it’s the deal of the century. For Trump, of course. It’s a ‘negocio redondo’, a perfect deal. Irúa Euribe, a Venezuelan geologist who worked at PDVSA, the state-owned energy company and Caracas’s cash cow, makes this clear. She speaks from Houston, where she attended the Global Energy Summit a few days ago.
Dr Euribe, Donald Trump has announced a major deal that sounds like an expropriation. Is that the case?
Yes, they will now ‘control’ 65 billion barrels of crude oil, a significant amount, given that Venezuela’s proven reserves total 300 billion barrels and are the largest in the world.
An agreement of this magnitude will require approval by the Venezuelan Parliament. Or perhaps even a constitutional amendment. No, unfortunately not. The new Hydrocarbons Law, which Trump surreptitiously imposed last January, includes an annex, the ‘Regulations’, the contents of which were only made public in July, which fails to specify the duration of the concessions granted to US companies; consequently, Trump can do as he pleases without any parliamentary approval in Caracas. Obviously, the United States will not own the oil fields but will have the right to exploit them. Then there is another key point: the creation of a special-purpose vehicle, in which the Trump Administration will hold a 51 per cent stake. This ‘holding company’ will enable US firms to make operational decisions without any technical or legal complications.
How was it possible to reach an agreement of this kind without running afoul of the legal restrictions that oil-producing countries impose on foreign companies?PDVSA has been progressively stripped of its assets; the initial idea of a ‘break-up’ was followed by further moves. And PDVSA’s current economic weakness has been exploited. Houston is home to Schlumberger, the world’s largest oilfield services company. Well, Schlumberger will hold a monopoly on ‘integrated studies’. That is to say, the detailed mapping of all the technical data required to commence the exploration and production phase. This constitutes a position of unfair competition that completely sidelines PDVSA. But there have been other ‘unfair’ manoeuvres as well.
