You could go to Harvard and take classes from Francisco Monaldi. You could hire Eurasia Group’s Daniel Kerner for big bucks. And you could wait months for a meeting with Chevron’s Ali Moshiri. Or you can go to YouTube and watch them speak with remarkable candor about the big picture of oil and gas in Argentina and Venezuela. For free, while you brush your teeth.
As usual, humans are failing. This master class by three of the top names in the industry has, count ’em, 206 views.
Here are a few notes. I took more, but they’re for me. You need to go watch this one for yourself.
Daniel Kerner, Eurasia Group:
– We are seeing growing “pragmatism” driven by government ownership of YPF shares. (State interests aligned with oil companies.)
– Expect more cycles between state control with declining production, then private freedom with growing resentfulness against oil profits, and so on.
Francisco Monaldi (Harvard, IESA, Baker Center):
– Shale oil may be safer against expropriation than conventional oil, because it needs constant investment. That makes it resistant to the resource-nationalist tendency to grab oil for its benefits without recognizing the costs of feeding the golden goose. (Later, says that exploring offshore at the Malvinas is similar — too expensive & risky for a government.)
– Venezuela is “opening to the oil sector.”
– To balance current budget at current fiscal take, Venezuela needs $200/barrel oil.
Ali Moshiri, Chevron Corp:
– VENEZUELA: big risk isn’t investment, “it’s the efficiency & effectiveness of getting things done.” He would gladly spend $20 billion on a new Orinoco Belt project, but implementation is tough. Country lacks human resources. Lack of skills and “capacity.” Also, supply chain is broken. Not much expropriation risk compared to other countries.
– ARGENTINA: totally different. Chevron sells oil domestically at $75 to $80 a barrel in Argentina. YPF is “one of the best companies to work with.” Argentina has “tremendous human resources capacity.” “Everything in place.” Only problem is “energy deficit.” (Gets fuzzy and diplomatic.) YPF is better than ever these days. Chevron spending $1 billion a year in Argentina.