Portfolio: Challenges Facing Venezuela's Oil Industry Stratfor

Vice President of Analysis Peter Zeihan examines the challenges faced by the Venezuelan oil industry regardless of who holds political power in Caracas.

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Best comment

1. AmazingNeZz AliE: reason why venezuela crisis is going on
2. Robin Swamidasan: Nice analysis. This is the first time I've seen (on You Tube) the challenges facing oil production in Venezuela being mentioned. I may add, that in addition to the heavy, sour crude, the terrain -- swamps, forests and mountains in between -- add to their difficulties. BTW, for few months (Oct '97 - Jan '98) I was a consultant at PDVSA, while employed by S.A.I.C (the US-based Science Applications ..., not the Shanghai Automobile ...). I was on the Telecoms + IT Infrastructure side. This was part of a US-led effort to privatize (or re-privatize) Venezuela's oil and associated support industries. Although most PDVSA workers had a sound feeling of national pride (they would rather work for a Venezuelan owned entity), I could sense that senior managers (esp. non-technical) were salivating at the prospect of a job with a private US-led firm -- with stock options and an IPO down the road. One of SAIC's goals was to hive off the Telecom-IT side of PDVSA into a services/consulting company. For the princely sum of $1 (and the expertise of people like me), SAIC would get 51% ownership of this new firm, tentatively named Intessa. PDVSA would get 49% in return for all its Telecom-IT infrastructure and personnel, and would outsource all relevant work to Intessa. Intessa was envisaged to expand into providing Telecom-IT services to all of Latin America. SAIC's consulting project was cancelled in early '98 when Chavez was elected and the price of crude fell from $40 to $10 (for no apparent reason?). In 2002 (approximately), Chavez cancelled the Intessa deal and faced a lawsuit from SAIC. I have a feeling that senior PDVSA officers must have resented Chavez for having taken away what looked like a golden opportunity. I wish Venezuela well. I like the place and its people. I have little doubt that the US has had a major role to play in fomenting and exacerbating the crises facing this country.

Portfolio: Challenges Facing Venezuela's Oil Industry
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News & Politics	Upload TimePublished on 17 Feb 2015