In this episode, WOLA’s Adam Isacson speaks with Francisco Monaldi, director of the Latin America Energy Program at the Center for Energy Studies at Rice University’s Baker Institute for Public Policy. Monaldi, a leading scholar of the politics and economics of energy and resource policy in Latin America, returns to the podcast six months after a previous conversation about Venezuela’s oil sector.
The focus is the oil agreement that the Trump administration and the government of interim president Delcy Rodríguez announced at the end of August. No text of the agreement has been made public, and, as Monaldi explains, the U.S. and Venezuelan descriptions of it do not match.
Monaldi walks through the deal’s most unusual features. The counterpart is North American Blue Energy Partners (NABEP), a company incorporated only a few years ago and controlled by businessman Alejandro Betancourt, who previously obtained contracts under the Chávez era. The 17 fields covered by the agreement appear chosen to maximize the headline reserve figure (65 billion barrels) rather than for near-term development potential. Monaldi also examines the mechanism by which the Defense Department’s Office of Strategic Capital, statutorily barred from holding equity, would take a “penny warrant” convertible into a 35 percent stake, which raises big questions that Congress has begun to probe.
The conversation turns repeatedly to transparency. “Opacity seems to be what is going to rule the way things are done,” Mondaldi observes. He contrasts the deal with competitive bidding rounds used in Brazil, Colombia, Mexico, and by Venezuela itself in the 1990s, and notes that Venezuela’s new oil law did not repeal Maduro’s Anti-Blockade Law, which makes contracts confidential. Oil companies’ executives might use this as an argument to try to avoid oversight. He raises the unresolved question of who absorbs the cost of selling oil to the U.S. government at roughly $40 a barrel when market prices are well above that, and the continuing lack of information about the U.S. Treasury account holding Venezuelan oil revenue.
The episode closes with the geopolitics: reports that Exxon may take over Russian-held assets, the status of Chinese and Russian stakes, Venezuela’s appearance at G20 energy meetings in Houston, restrained opposition reactions including from María Corina Machado, and strongly negative Venezuelan public opinion.
“Why is the Venezuelan government… going to be subsidizing the richest country in the world?” Monaldi asks. He repeats the key point, voiced in our earlier conversation, that only a democratic transition can provide would-be investors with the certainty and confidence that robust participation in Venezuela’s energy sector would require.
Download this podcast episode’s .mp3 file here. Listen to WOLA’s Latin America Today podcast on Apple Podcasts, Spotify, iHeartRadio, or wherever you subscribe to podcasts. The main feed is here.
Video available with Spanish subtitles.
