Venezuela Mulls Privatizing Oil Amid Economic Freefall

[thackney]

Venezuela Mulls Privatizing Oil Amid Economic Freefall
https://www.rigzone.com/news/wire/venezuela_mulls_privatizing_oil_amid_economic_freefall-27-jan-2020-160904-article/
 January 27, 2020

Facing economic collapse and painful sanctions, the socialist government of Venezuelan President Nicolas Maduro has proposed giving majority shares and control of its oil industry to big international corporations, a move that would forsake decades of state monopoly.

Maduro’s representatives have held talks with Russia’s Rosneft PJSC, Repsol SA of Spain and Italy’s Eni SpA. The idea is to allow them to take over government-controlled oil properties and restructure some debt of state oil company Petroleos de Venezuela SA in exchange for assets, according to people with knowledge of the matter.

The proposal, which could offer a balm to the country’s disintegrating oil industry, is in early stages and faces major obstacles. Venezuelan laws would have to be changed, there is disagreement over how to finance the operations, and Washington’s sanctions bar any U.S. companies from doing business with the Maduro regime without a waiver. The sanctions have also discouraged non-U.S. firms from investing in Venezuela.

Once an admired state-dominated company producing 3.5 million barrels per day, PDVSA is pumping at a record-low of 700,000, despite sitting on the world’s largest known reserves. Its finances are in tatters: The central bank’s hard-currency reserves have plunged to the lowest in three decades while the government’s cash holdings total less than $1 billion....

[IsailedawayfromFR]

Let the Russian and EU companies take on the problems of Venezuela.

We have been fooled twice already and do not need that siren song to lure us once again to disaster.

[Smokin Joe]

They had 'foreign' investors, then the Government took over and made a mess of things.

Who is going to risk their investment to get things going again without some significant guarantees?
Like a serious change in government there, for starters.

Fool me once...

[Cyber Liberty]

I'm sure there are plenty of investors lined up to have a bite at this apple.  I have no sympathy for them when they get burned down the road.

[thackney]

I'm sure there are plenty of investors lined up to have a bite at this apple.  I have no sympathy for them when they get burned down the road.

It is a really, really big apple that makes the temptation large.

[LadyLiberty]

And as soon as the investor(s) turn things around the assets will be nationalized again.

[IsailedawayfromFR]

It is a really, really big apple that makes the temptation large.

With its own huge oil reserves, I wonder why Russian companies would bother to spend money in Venezuela anyway?

Could it be they are not really interested in the oil but power instead?

[thackney]

With its own huge oil reserves, I wonder why Russian companies would bother to spend money in Venezuela anyway?

Could it be they are not really interested in the oil but power instead?

A foothold in the America's, with a return on investment in addition.

[Absalom]

What is the quality (sweetness/sourness) of Venezuelan oil?

[Cyber Liberty]

What is the quality (sweetness/sourness) of Venezuelan oil?

Poor.  It's "Brent" crude, as opposed to "Sweet."  You ask the right question, by the way.

[thackney]

Poor.  It's "Brent" crude, as opposed to "Sweet."  You ask the right question, by the way.

Brent is a sweet crude.  It is an acceptable substitute for WTI in most contracts.

Venezuela produces both sweet and sour, but most of it is sour and heavy.

[Cyber Liberty]

Brent is a sweet crude.  It is an acceptable substitute for WTI in most contracts.

Venezuela produces both sweet and sour, but most of it is sour and heavy.

Thanks.  I knew you would have the straight dope.  Not my wheelhouse.

[Joe Wooten]

A foothold in the America's, with a return on investment in addition.

It will take a HUGE investment and several years to a couple of decades to start paying off. Most of the Venezuelan oil fields have heavy maintenance requirements that have been ignored for the last 25 years. Most of the infrastructure will have to be rebuilt,

[Smokin Joe]

What is the quality (sweetness/sourness) of Venezuelan oil?

Heavy, sour. (<=20API gravity, H2S)

[Cyber Liberty]

Heavy, sour. (<=20API gravity, H2S)

How many refineries are capable of breaking that down?  I think not many, but this is not my bailiwick.

[Smokin Joe]

How many refineries are capable of breaking that down?  I think not many, but this is not my bailiwick.

Ones which can handle the Canadian Tar Sands crude (bitumen) usually are pretty close. It works out that some of that Canadian crude would have replaced the Venezuelan as a feedstock, especially if the Keystone XL had been completed sooner.

[IsailedawayfromFR]

What is the quality (sweetness/sourness) of Venezuelan oil?

Easily some of the crappiest crude found anywhere in the world.

Considering the problems to get a highly viscous crude to the surface, the corrosive nature of the sour part of it on equipment, pipelines, terminal, ships and refineries, it can be very costly.  And just to get it flow causes most to be blended with less viscous crude too.

I would venture to say the profitability on a per barrel basis is only 10% to 20% compared to a barrel produced in the Permian.

There are a number of refineries setup to handle this crude, but many billions were spent to configure them that way.

[Absalom]

Gentlemen, thank you.

[Smokin Joe]

Easily some of the crappiest crude found anywhere in the world.

Considering the problems to get a highly viscous crude to the surface, the corrosive nature of the sour part of it on equipment, pipelines, terminal, ships and refineries, it can be very costly.  And just to get it flow causes most to be blended with less viscous crude too.

I would venture to say the profitability on a per barrel basis is only 10% to 20% compared to a barrel produced in the Permian.

There are a number of refineries setup to handle this crude, but many billions were spent to configure them that way.

The plan, iirc, along the Keystone, was to blend Bakken Crude (30-35 gravity API) to make it easier to pump, or with other lighter hydrocarbons ("dibit" https://www.api.org/oil-and-natural-gas/wells-to-consumer/exploration-and-production/oil-sands/diluted-bitumen )
Vevezuelan crude would have similar problems, especially producing it from wells instead of pits.

[IsailedawayfromFR]

The plan, iirc, along the Keystone, was to blend Bakken Crude (30-35 gravity API) to make it easier to pump, or with other lighter hydrocarbons ("dibit" https://www.api.org/oil-and-natural-gas/wells-to-consumer/exploration-and-production/oil-sands/diluted-bitumen )
Vevezuelan crude would have similar problems, especially producing it from wells instead of pits.

Yes, I have a buddy who runs a company involved in crude blending on Alberta crude.  He is doing well.

And for good news, am sure you saw this one.  Perps are in some serious trouble and the trial later this year may wind up with them in prison for awhile.
Look how brazen one perp is doing sabotage in front of an officer.  A statement needs to be made this is unacceptable behavior.

Women who 'sabotaged' Dakota Access Pipeline charged almost 3 years after damages first reported
https://www.desmoinesregister.com/story/news/crime-and-courts/2019/10/01/dakota-access-pipeline-iowa-sabotage-federal-charges-jessica-reznicek-ruby-montoya-trial-activist-ia/3833320002/

As an insight into the way their minds think, here is a piece of article I lifted

The two held a news conference outside the Iowa Utilities Board office in July of 2017. Reznicek read a statement that said they tried several actions to stop the pipeline from being completed and transporting oil. She says they turned to vandalism after the other actions failed.

“On election night (2016), we began our peaceful direct action campaign to a Dakota Access construction site and burned at least five pieces of heavy machinery in Buena Vista County, Iowa,” Reznicek said . She says “our action wasn’t much, but we at least stopped construction for a day at that particular site.”

Reznicek says they then looked for a better way to damage the pipeline. “We then began to research to the tools necessary to pierce through a 5/8 inch steel pipe — the materials used for this pipeline. In March we began to apply this self-guided information. We began in Mahaska County, Iowa, using oxyacetylene cutting torches to pierce through exposed, empty steel valves, successfully delaying completion of the pipeline for weeks,” Reznicek said.

Montoya says they were pleased with the way destroying the valves stopped the progress of the pipeline. “After the success of this peaceful action, we began to use this tactic up and down the pipeline, throughout Iowa and a part of South Dakota, moving from valve to valve until running out of supplies,” Montoya says. The two then said they moved back to arson, using tires and gasoline-soaked rags to burned multiple valve sites, their electrical units, as well as additional heavy equipment located throughout Iowa.

The two said they attempted to pierce a valve located in Wapallo County in early May and were disheartened when they discovered the pipeline was already working. The two finished their statement and then pulled a hammer and crowbar from their backpacks and began to tear letters off the Iowa Utilities Board sign behind them. State Troopers quickly moved in and arrested them on vandalism charges.

[Joe Wooten]

I'd say the pipeline company would have ample justification for shooting those idiots. Put cameras to catch them and have an armed response team ready to go get them.

[IsailedawayfromFR]

I'd say the pipeline company would have ample justification for shooting those idiots. Put cameras to catch them and have an armed response team ready to go get them.

The alternative may be to permit them to go ahead and drill into active pipelines so “For example, talking about somebody that needs to be removed from the gene pool, we had people drilling holes in our pipe.”

https://thinkprogress.org/pipeline-execs-discuss-opposition-c1d029836d9b/

[Cyber Liberty]

The alternative may be to permit them to go ahead and drill into active pipelines so “For example, talking about somebody that needs to be removed from the gene pool, we had people drilling holes in our pipe.”

https://thinkprogress.org/pipeline-execs-discuss-opposition-c1d029836d9b/

FTA, it sounds like they know better than to cut into a live pipeline:

The two said they attempted to pierce a valve located in Wapallo County in early May and were disheartened when they discovered the pipeline was already working.

[darroll]

History just repeats itself.

[Smokin Joe]

During the "water protectors" protest, three active pipelines were tampered with in the vicinity by these idiots.

That the potential disasters they cause would be themselves making the messes they accuse others of (and use to justify not having pipelines) doesn't even seem to dawn on their warped minds.



(hat tip to inside energy.org, article here: http://insideenergy.org/2017/02/18/cleaning-out-the-dakota-access-protest-camp/ )
Dakota Access Pipeline protest camp.

720 Semi loads of debris and a human body were removed from the site, (the body was in a creek!).
Some "water protectors".
Why is it that people who allege they are saving the planet make such a mess?

So they have something to take pictures of to show the planet needs saving.