Venezuela is undergoing some of its worst moments.
This disaster is so huge, that what once was one of the largest and most powerful oil companies
in the world, PDVSA, is now practically bankrupt and has more problems, including extracting
oil.
One second, the oil company with the largest reserves in the world has problems extracting
it?
Yes, you heard that right, and we’ll tell you all about it in this video…
Folks, I think we all know it: Venezuela is undergoing a true catastrophe, and not only
an economic one.
It is, above all, humanitarian.
Such a huge disaster that in recent years it has caused between 3 and 4 million Venezuelans
to flee the country.
That is, more than 1 in 10 inhabitants.
And the truth is… we’re not surprised.
See, according to the latest statistics, 87% of the population, 87%, almost 9 out of every
10 Venezuelans, are poor...
And, on top of that, most of Venezuela’s population, 60%, isn’t only poor, they live
in extreme poverty.
But... not only that...
Venezuela is burning down…
According to data from the Venezuelan Social Conflict Observatory, in 2017 almost 10,000
protests were registered throughout the country, more than 27 a day.
And what’s even worse:
According to information from the former Attorney General, Luisa Ortega, since 2015 the police,
the National Guard, the Army and the different intelligence services, have killed more than
8,000 people.
Of course, most of them were regime opposers.
Crisis, hunger, violence, repression...
everything indicates that Venezuela will soon undergo a refugee crisis of colossal dimensions.
Because dear viewers, let's be honest, things aren’t looking good at all.
See, for years, the "Bolivarian revolution" of Chavez, Maduro and company had a great
ally, and we’re not talking about Cuba, or Russia or any other country, but about
oil... the black gold that financed the "revolution".
For a long time, the huge income this raw material brought financed all of the regime’s
policies, and they didn’t care at all about the consequences.
That is to say, factories were closing?
Foreign investment was fleeing the country?
It didn’t matter because, folks, they had oil dollars.
However...
all of that is about to end.
Yes, Venezuela has a lot of oil.
But... one thing is having oil and another quite different thing is being able to exploit
it.
Did you know that PDVSA , the national oil company, is practically about to collapse?
Listen up.
(THE FALL OF PDVSA
Petroleum of Venezuela, PDVSA , was created by government decree in 1976, to integrate
all the oil assets the State had nationalized...
This company soon became a world-class colossus.
Do you know why?
Well, among other things because this company has the largest reserves on the planet...
and, we mean large:
there are more than 300 billion barrels of oil certified, more than the reserves of Saudi
Arabia, the Emirates, Russia or any other oil power.
Yes, it's true, we've said it here, Venezuelan oil doesn’t have the highest quality, but...
it doesn’t matter.
We’re talking about a huge amount of resources, almost 20% of all known world reserves.
Well, the fact is that this company, PDVSA , peaked in production in 1998, a year before
Hugo Chávez came to power, at which time PDVSA was extracting 3 and a half million
barrels per day.
Since then, things have changed a lot.
By the year of Hugo Chávez’sdeath in 2013, production had decreased by 1 million barrels
per day…
One moment, one million less?
Could it be that Hugo Chávez’s Bolivarian government didn’t like oil?
Could it be part of a twisted plan to diversify the Venezuelan economy?
Well... no.
Quite the opposite.
Hugo Chávez wanted to increase production to 5 million barrels.
The problem was that, they simply weren’t able to do it.
But if you think that the commander’s results were bad, you haven’t seen anything yet…
Because since Nicolás Maduro came to power, production has sunk to 1.8 million barrels.
That means that, while countries like the United States have doubled their production,
Venezuela produces half as much oil as when the revolution began.
Very successful.
And if you think that’s the worst of it, think again.
No, he future looks a lot worse.
Now, at this point, you may be wondering, what the hell is going on with PDVSA ?
(THE KEYS OF A DISASTER FORETOLD)
The PDVSA’s history, dear viewers, has been the story of a disaster foretold.
The best example is that of the Paraguaná refining complex, which consists of 3 crude
oil refineries and is one of the 3 largest complexes of its kind on the entire planet.
For years, it was Venezuela’s industrial pride, the Crown jewel.
However, today...
it barely operates at 15% capacity... and all kinds of accidents tend to happen, why?
("There’s no maintenance.
They sucked everything they could from PDVSA without investing, there’s nothing left
to squeeze" Pablo Céspedes, plant operator.)
And this isn’t some extraordinary case.
At the end of October, also in the Paraguaná refining complex, the Amuay refinery spilled
over 200,000 gallons of gasoline into the bay;
a few days later, another refinery in the complex, the Cardon refinery suffered a fire
that the firemen could barely contain, because they didn’t even have foam to fight the
flames.
And so on and so on.
Because the truth is that most of the oil company’s facilities are in terrible condition.
But...
How do you think they reached this point?
Well, you see, the Chavez government always saw PDVSA as a kind of dairy cow from which
they could get all the resources they needed for their "Bolivarian revolution"...
the problem is that the oil industry requires lots of investments, investments that the
Venezuelan government simply didn’t want to make.
Even with the fact that it indebted PDVSA to the brim.
By the way, do you know how indebted this company is today?
Listen to this… we’re not talking about 1 or 5, but 90 billion dollars.
A fortune so big that Venezuela could have even bought multinationals like Goldman Sachs,
Nike or Siemens.
Now that’s a lot of debt!
But...
do you think that’s all?
Not even close.
They also used the company to plug-in, place and hire thousands and thousands of supporters,
friends and family members... from which PDVSA lost even more resources.
And if that weren’t enough, the Chavez regime also placed unskilled and inexperienced personnel
in management positions, while dismissing and driving away thousands and thousands of
experienced employees because of their political beliefs.
Yes, this is how PDVSA has run out of money and out of human resources..
Now we can understand why oil production is dropping.
Of course, the consequences of all this are... terrible for the country.
(THE CONSEQUENCES)
Oil is essential for the Venezuelan economy...
especially because there’s no other industry left standing.
Their dependence is so great that oil generates 95% of all foreign currency profits, in dollars,
for example.
And these currencies, my friends, are what Venezuela needs to be able to import food,
medicine, gasoline – yes, today Venezuela has to import gasoline – or anything else.
But of course...
as oil production keeps plummeting…
the country has to import fewer things.
And you know what?
Since Venezuela is literally producing nothing and has to import everything, the dwindling
oil money is no longer enough to pay all the bills.
But... of course, as you all know, when you spend more money than you make… money goes
away… and that’s precisely what’s happening to Venezuela, which according to some calculations,
barely has 10 billion dollars in foreign reserves, which is their lowest number in 40 years..
This means… that when the money is gone, they won’t be able to import anything else
than what they can buy with what they make from the oil… which is decreasing.
Do you see the problem?
Until now, as we saw here on VISUALPOLITIK, Nicolás Maduro’s government has tried to
buy time by resorting to international markets to issue debt...
at scandalous rates, sometimes as high as 40%.
Obviously, issuing debts with implicit rates, interests of 40% can only mean future ruin.
And in any case, that is actually no longer a possibility.
In fact, both the Venezuelan government and PDVSA are incurring defaults, that is, they
aren’t paying their debts.
("S&P downgrades seven sovereign Venezuelan bonds to the default level" Bank and Business)
Another route they’ve attempted, was that of the Chinese rescue... and the Chinese answered
and placed more than 23 billion dollars in loans on the table...
But...
everything has a limit, and they are no longer willing to continue giving more money for
nothing.
Check this out.
( "The Chinese oil company Sinopec sues PDVSA for unpaid debts" OilPrice.)
The situation, my friends, is so desperate that the Cuban government has decided to seize
the 49% that PDVSA held in a Cuban refinery as compensation for unpaid debts.
You heard that right,
Not even Cuba trusts the Maduro regime!
And, it was all of this that led to the latest Chavista event: the Petro.
THE VENEZUELAN CRYPTOCURRENCY
As we’ve seen, with every day that passes the Venezuelan government has less access
to foreign currency... which is obviously a huge problem... because without foreign
currency they can’t import.
But, based on this problem, an idea came up:
Cryptocurrency is in fashion, so why not launch their own cryptocurrency?: The Petro.
Of course...
the petro is a
very particular currency... among other things, because it’s controlled by Maduro’s government.
Under these conditions, I ask you a question,
Would you be willing to invest a single euro, a single dollar in this new cryptocurrency?
Or in other words, would you put your money in the hands of the Venezuelan government?
I know I wouldn’t… not even a penny.
And precisely because no one in their right mind would do such a thing, the Venezuelan
government has had to back this particular cryptocurrency with oil.
That is, each Petro will be guaranteed by a barrel of oil from the Venezuelan oil reserves,
reserves that, of course, are underground.
In this way, the petro’s value is apparently linked to the value of this raw material.
Does that sound better?…
well… just a moment, because we cannot forget a detail, a very, very important detail:
the oil reserves, my friends, are also under the control of the government.
And I wonder, do you really think that this government is going to exploit those reserves?
And even if they did, do you think they’d really back the petro?
And what about the support rate?
Wouldn’t the resources generated be spent?
Wouldn’t they impose restrictions or regulations that would benefit them?
And above all, why the hell take the risk of investing in petros?
By the way, an important point, the petro isn’t convertible.
That is to say, even though it is supposedly backed by oil barrels, you can never exchange
it for the barrel or for any title that proves a right over those barrels.
("The petro is a cryptocurrency that isn’t crypto, that is backed by reserves that aren’t
reserves.
That can only be monetized with a production that is collapsing and issued by a government
that is in default and has no dollars."
Francisco Monaldi, professor at the Rice University’s Baker Institute in Houston)
Folks, the petro doesn’t seem to be anything more than a last ditch attempt to gain time
and try to obtain the greatest possible number of dollars by taking advantage of the popularity
of cryptocurrencies, and perhaps of capital laundering… because, who would put the dollars
on the table?
The fact is that if this crypto doesn’t work… and that looks like the most plausible
scenario…
Maduro's regime will only have three options:
first, accept some kind of internal revolt and leave power one way or another, which
seems very difficult;
second, use an even tougher hand and condemn Venezuela to an even greater humanitarian
disaster;
or third, try to get the Chinese and Russians to buy the country’s national resources
in mass and by all means, such as refineries, oil and many other raw materials.
That is to say, become a kind of colony by selling at a loss each and every one of the
Crown jewels so that the regime’s elite can continue to enjoy their standard of living.
Dear viewers, Nicolás Maduro and company are still in power, and it hardly seems like
Venezuela will have a better future.
But now... it’s your turn…
Would you be willing to exchange your money for petros?
Leave your answer in the comments and in this survey as well.
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