Venezuela reduced its oil windfall profits tax somewhat today. I think it vindicates my analysis from two years ago, when the tax was raised, which was that the increase was just a way to get some extra money in the slush fund for last year’s election campaign. It also vindicates my recent analysis that cutting that tax was one of the few things a new government could do that wouldn’t stir up the Venezuelan public, though I was assuming in that article that Chávez would no longer be in command. OK, maybe he isn’t. What do we know, anyway?
Anyway, I’m looking forward to Eva Golinger’s take on this tax cut. She said the increase two years ago was good for the Venezuelan people. Now PDVSA has had to turn over a few billion dollars to FONDEN and has fallen even further behind on its responsibilities, and now the tax gets cut. Is this also good for the Venezuelan people?
With 2012 gone, it’s time to check in on good old Arevenca, the defunct Venezuelan gravel company that signed a deal to provide $200 billion a year in oil products to China’s most important aircraft manufacturer. It crosses my mind for two reasons. First, Arevenca is the most popular search term bringing people to this website. Hello, Arevenca fans! Second, I hear via the e-mail that people involved in the deal travel the world, rightly bragging about their roles in forging this $2 trillion-with-a-tree, 10-year “oil deal” with Chinese aircraft maker XAC.
So how is the deal doing? Let’s start with Chinese customs, where we can see how much oil and fuel oil the country imported in 2012. In round figures, 2 million tons a month of fuel oil and 23 million tons of crude oil. That works out to at most 175 million barrels a month of imports, which at $100 a barrel would be $17.5 billion a month, or just over $200 billion a year. So, apparently Arevenca is now brokering substantially all of China’s fuel imports. Congratulations.
But for all that success, it’s a shame that most of those involved haven’t gotten credit. The Arevenca press release and EFE’s adulatory TV news report never gave the names of most of the participants. This is a disgrace. These people were involved in the biggest oil deal in history. They deserve to be recognized. Here (once again) is the high-res photo from the ceremony:
Click for full size
Let’s see what we can do to catch up with the players: Continue reading
The US exports about 40,000 barrels a day of MTBE, a probably carcinogenic chemical used to replace lead in gasoline. Almost all the exports go to Mexico and Venezuela. MTBE was banned in the US because it’s soluble in groundwater. That means that when an underground storage tank springs a leak, it isn’t just a local problem, like gasoline. It spreads quickly and pollutes drinking-water aquifers.
The good news is that Mexico and Venezuela don’t have any important biodiversity, so a bit of carcinogen in the groundwater won’t hurt anyone. Oh wait, scratch that.
US MTBE exports by destination in 1000s of barrels per day.
(Blerg inspired by this, about the ongoing exports of lead from the UK.)
I see that FTI Consulting, the company apparently doing reputation protection for Venezuelan electricity contractor Derwick Associates, has been poking around this website*, my more professional site, and my LinkedIn page. I hope they feel welcome. I see that yesterday someone at FTI read this article:
A Venezuelan securities regulator sits in the dock, charged with demanding a $750,000 (€553,000) bribe from the owner of a brokerage under government receivership. A Florida man stands accused for money laundering after offering accounts to help Venezuelan currency traders move dollars.
What’s most astonishing about these white-collar prosecutions is that they aren’t being pursued by Venezuelan officials with jurisdiction over them. Instead, it’s the United States using its role as the world’s financial hub to expose potentially embarrassing secrets of Hugo Chávez’s régime….
With Caribbean financial havens a close yacht ride from Venezuela’s coast, it may seem odd that financial criminals take their chances with US authorities that may be biased against their country. But as long as the dollar remains the Americas’ universal currency, successful Caracas residents keep fleeing to Florida, and currency controls force people into the black market, US prosecutors will have plenty of Venezuelans to choose from.
FTI has good taste. It’s an interesting story, worth a read. The natural easter eggs story was pretty good too. Check it out.