00:00I'm joined now by Christophe Ruhl, who's a global energy expert from Columbia University.
00:05Christophe, thanks so much for joining us.
00:07Do you think that this is really what Venezuela needs,
00:10bearing in mind the absolute devastation to the economy after the earthquakes in June,
00:16which killed 6,500 people, destroyed hundreds of buildings?
00:23I think what Venezuela needs for sure is a lot of investment in its energy sector,
00:27specifically its oil sector in oil production.
00:31I'm not sure, however, that this kind of arrangement, of which we know very little at the moment,
00:36is the way to accelerate that investment.
00:39I could also imagine that this arrangement, which we have now,
00:44is fraught with so many unclarities and so much risk to future implementation,
00:48both from changing administrations in the U.S. and from resistance on the part of Venezuela,
00:55that it may make Venezuela less attractive to the global oil companies that Venezuela is trying to attract.
01:03Yeah, I mean, the details are not really clear at this stage.
01:06For example, is it clear what this means for Venezuela's control over its own oil industry?
01:12We're hearing that American firms are going to come in and take over.
01:15What are you hearing?
01:17No, we don't know that.
01:19What is clear yet is that this has been described as a deal which gives the U.S. controlling rights
01:25to 65 billion of Venezuela oil production.
01:29This control is exercised partially by equity ownership in a company
01:33which has the rights to produce this oil in 17 different fields which have not been named.
01:40And partly this right is exercised by the U.S. able to buy this oil at costs.
01:46What we don't know is the split, how much equity rights they will get, this new company,
01:51and how much oil they can buy at cost.
01:54What we also don't know is what the nature of this company and who the counterpart is.
01:59On the one side, it seems to be the U.S. government,
02:02which then maybe intends to give shares to its own companies.
02:06On the other side, it's said to be a private company,
02:10but the person who said it is an anonymous U.S. government official,
02:14so we know nothing, who sits on the Venezuelan side in there.
02:17And then by the Venezuelan constitution, oil under the ground cannot be transferred.
02:21That is the property of the Venezuelan people.
02:24So only the right to produce it can be transferred.
02:27This is all very unclear.
02:29It could, in theory, of course, work.
02:31If there is a good operating company, it could be beneficial to the U.S.
02:36because it helps them to replenish, for example, their depleted strategic reserves.
02:43It could even be beneficial to Venezuela if it really attracts investors.
02:48But as I said, you know, put yourself in the shoes of a global international oil company,
02:53and their speciality is to go around the globe, work with technically difficult fields,
03:00with difficult places and difficult governments.
03:02And now you get involved in something like this.
03:05What would the neighboring countries say?
03:06What would your other clients say to that?
03:08They would probably say, oh, this company X, you know,
03:11they should stay where they are in Venezuela.
03:12We don't want them on our grounds here.
03:14So I could imagine that this is more of a deterrent to companies than an investment incentive.
03:19So it could be hitting a couple of roadblocks.
03:23Is it clear how the oil reserves will be mined, when they'll be mined,
03:28and when any potential benefit around the price of oil might flow into the system?
03:36Yes and no.
03:37I mean, what has been announced is that this will be a 100-year contract.
03:41And what we do know is that this will not, at the beginning of production here,
03:44will not be measured in days, weeks or months.
03:46It will take a long time to get Venezuelan production facilities upgraded so much
03:52that they will have a noticeable impact on global production.
03:56That is possible.
03:57That can happen, and hopefully it will happen.
03:59But it's not something which will affect gasoline prices in the U.S.
04:03before the mid-term elections.
04:04That's a long-term project.
04:06That's a long-term project.
04:06That's a long-term project.
04:06That's a long-term project.
04:06That's a long-term project.
04:06That's a long-term project.
04:06We'll see you next time.
