One wonders if Venezuela’s energy minister Nelson Martinez has packed extra underwear on his new tour of Opec and non-Opec oil producers. The streets of Caracas are ablaze with protests, and Opec’s traditional price hawk has become a crippled bird.
It is a rich irony that the accelerating downfall of Venezuela´s once-thriving oil industry isn´t enough to realize the country´s ambitious oil price aspirations. The Orinoco oil belt is still mostly an undeveloped wasteland, and grand schemes for offshore gas have given way to gruesome images of spiraling canisters of tear gas.
A cataclysm that idles Venezuela’s faltering oil production altogether would knock out around the same volume that Opec and non-Opec producers agreed to collectively cut for six months back in December.
Such a dark scenario still seems far-fetched. Caracas has said it wants to expand and deepen existing production restraints not just for six months, but for a decade, with the aim of boosting prices to $70/bl or beyond. In a humbler joint statement with Algeria yesterday, Venezuela said it favors an extension of the current agreement. That looks like a done deal, but it will hardly be enough to sustain the desperate Venezuelan regime.
Why bother with the oil price anyway? President Nicolas Maduro is too busy dancing salsa to distract Venezuelans from their hunger, while Martinez and state-owned PdV chief executive Eulogio Del Pino tweet agitprop.
It doesn´t look like they can keep a lid on the chaos for much longer. The widespread protests show no sign of breaking up. Thousands of phantom PdV workers summoned to march are no match for daily opposition demonstrations in spite of a lethal crackdown.
Foreign oil companies led by Chevron, Statoil, Total, Repsol, Eni and Shell already had only a limited presence on the ground and tight restrictions on travel. Now they are nervously wondering if their assets and agreements will be honored when the regime they could later be seen as enabling comes undone. China is especially exposed because of its extensive oil-backed loans. And Trinidad and Tobago´s urgent cross-border gas plans now look naive. Venezuela´s emboldened opposition lawmakers stripped of their powers last month have long said any deals that were not approved by the legislature will not be honored in the future.
The Venezuelan bird can no longer fly, but no one is sure who will take over the nest.