Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: If I come to correctly, I think he mentioned the
Speaker 2: world about twenty or twenty one times his first press conference.
Speaker 2: That really tells me everything.
Speaker 3: That's Bloomberg opinion columnist Javier Blass, and that word he's
Speaker 3: talking about that President Trump used almost two dozen times
Speaker 3: in that one press conference is oil. It's part of
Speaker 3: almost every conversation about Venezuela. The President has big plans
Speaker 3: for the country, and he's hyper focused on its energy sector.
Speaker 4: We're going to have our very large United States oil companies,
Speaker 4: the biggest anywhere in the world, go in spend billions
Speaker 4: of dollars, fix the badly broken infrastructure, the oil infrastructure,
Speaker 4: and start making money for the country.
Speaker 3: Since the attack, oil prices have swung back and forth,
Speaker 3: and on Friday they were right about where they were
Speaker 3: the night before. The US removed Nicholas Maduro from Venezuela.
Speaker 3: On Friday afternoon, President Trump met with executives from the
Speaker 3: oil industry at the White House to talk about what
Speaker 3: comes next.
Speaker 5: All of the companies here today are going to be
Speaker 5: treasured partners and bringing the nation of Venezuela back to life,
Speaker 5: restoring its economy and generating great wealth for their companies
Speaker 5: and for their people, and also great wealth for the
Speaker 5: American people, and tremendous wealth for the companies that are going.
Speaker 3: So why Venezuela It only produces about one percent of
Speaker 3: the world's oil, Javier Blast says, you have to look
Speaker 3: at the country's past to understand its potential.
Speaker 2: Back in nineteen seventy, which is the heyday of the industry,
Speaker 2: the country produced about three point seven million borrows a day.
Speaker 2: Today he palms about one million borrows today. It is
Speaker 2: a shadow of what he used to be. But he
Speaker 2: has quite a lot of oil and the means to
Speaker 2: be one of the top oil producing countries. But having
Speaker 2: the means doesn't mean that it's gonna happen.
Speaker 3: I'm David Gerat and this is the big take from
Speaker 3: Bloomberg News on today's show, Venezuela's oil, what it would
Speaker 3: take to get it flowing the way President Trump wants,
Speaker 3: and how it's key to the president's foreign policy objectives
Speaker 3: and his political success at home. Javier Bloss is a
Speaker 3: columnist with decades of experience covering energy that He's spent
Speaker 3: years touring oil fields and refineries.
Speaker 2: Oil for Venezuela is a costco is basically what keeps
Speaker 2: the economy running.
Speaker 3: And given that, Javier says, you'd think the country would
Speaker 3: have invested more in the industry in recent years. But
Speaker 3: Venezuela's oil infrastructure has fallen into disrepair. It's a shadow
Speaker 3: of what it once was.
Speaker 2: The oil sector under Maduro was just complete mismanagement, corruption,
Speaker 2: and then exacerbated by the impact of American sanctions on
Speaker 2: the sexual The facilities are completely impact state. They need repairs,
Speaker 2: they need basic maintenance, and that has not been happening.
Speaker 2: Venezuela has lost about twenty five percent of his population,
Speaker 2: and this has been mostly educated people who used to
Speaker 2: have very well paid jobs in the oil industry and
Speaker 2: that they are no longer there. So under Maduro it
Speaker 2: was just a complete collapse.
Speaker 3: Delci Rodriguez was the country's oil minister before she became
Speaker 3: the vice president, now the acting president of the country.
Speaker 3: How could Venezuela's approach to oil shift now that she's
Speaker 3: in charge.
Speaker 2: Well, the first question is is he really in charge?
Speaker 2: Because Trump claims that he is running Venezuela, so it's
Speaker 2: difficult to know exactly who really is calling the shots
Speaker 2: in Caracas. Delci Rodriguez has been seen as a relative
Speaker 2: moderate figure within the Chavismo, this revolutionary movement that has
Speaker 2: been running Venezuela for the last twenty five years. So
Speaker 2: very much depends on what she wants to do, but
Speaker 2: it's also going to depend a lot of what the
Speaker 2: White House allows her to do. The oil fields there
Speaker 2: are so prolific that even with just some basic expending,
Speaker 2: some basic maintenance, things could really regain some traction very quickly.
Speaker 2: And just to get a sense of what I'm talking about,
Speaker 2: I have been speaking with format executives of the state
Speaker 2: on oil company called Peevesa and Venezuela and oil engineers,
Speaker 2: geologists who have a great knowledge of the industry, and
Speaker 2: one of the things that they said to me is,
Speaker 2: so you to understand what the problem was, is that
Speaker 2: all what is needed today to get things starting to
Speaker 2: look a bit better. Is that pump that failed seven
Speaker 2: years ago, We're going to replace it. That oil pipeline
Speaker 2: that started leaking three years ago, We're gonna fix it.
Speaker 2: This is the state of the industry just it was
Speaker 2: led to rot. And now if some money can be
Speaker 2: a spend that could really go a great way into
Speaker 2: a stabilizing production and it started growing. But they're going
Speaker 2: to be conflicted. Needs Venezuela needs food, lots of food.
Speaker 2: It's a hungry nation. And how the White House balanced
Speaker 2: that food versus oil, how the government in Caracas balance that,
Speaker 2: and at the same time, the relationship with Washington. I
Speaker 2: don't know how that's gonna play out.
Speaker 3: You know, you and I have talked recently about how
Speaker 3: the world is washed with cheap oil. If you guys
Speaker 3: doesn't need cheap oil at this point in time. Given that,
Speaker 3: what is your sense of the motivations here on the
Speaker 3: United States's part?
Speaker 2: Well, I think that President Trunk has been quite transparent
Speaker 2: about this. I mean, I remember back in two thousand
Speaker 2: and three covering the invasion of Iraq and a lot
Speaker 2: of debate and really heated arguments about is this about oil?
Speaker 2: And the answer at that point from the administration of
Speaker 2: George W. Bush was absolutely not. This is about democracy.
Speaker 2: And in this occasion, President Trump has been very clear
Speaker 2: that oil is absolutely central to what he's doing, and
Speaker 2: he has been quite transparent that he wants lower oil prices,
Speaker 2: and I mean lower than today, which are already the
Speaker 2: lowest in five years. We are trading between fifty five
Speaker 2: and sixty dollars a barrel, and President Trump in the
Speaker 2: past has talked about getting American oil West Texas Intermediate
Speaker 2: down to fifty dollars a barrel, and he wants the
Speaker 2: price of castling down to two and a half dollars.
Speaker 2: I think he will be very happy.
Speaker 3: The US produces a lot of oil, has access to
Speaker 3: oil from Latin America, from Canada. How much influence does
Speaker 3: that give the US.
Speaker 2: The Americas today all the way from Alaska to Patagonia
Speaker 2: in Argentina, produce about forty percent of the walls oil.
Speaker 2: That's not research, that's actual production today. So President Trump
Speaker 2: is an unfortunate position that this is happening under his watch.
Speaker 2: Some of it he is trying to engineer, but a
Speaker 2: lot of it will be happening, notetheless because of discoveries
Speaker 2: in Brazil, in Guijana, the growth of the industry in Canada,
Speaker 2: and certainly the growth of the usl industry. That means
Speaker 2: that there is a surplus of oil today in the market,
Speaker 2: and it means that prices are going to stay lower
Speaker 2: than that there has been the case in recent years.
Speaker 2: But it also means that that buffer allows for the
Speaker 2: market to carry on if there is some kind of shock,
Speaker 2: and what could be a shock that the US decides
Speaker 2: to do something about Russia or Iran. The American military
Speaker 2: adventures in the past were constrained by the impact that
Speaker 2: those will have in the price of oil. Today, the
Speaker 2: Pentagon really is underrestrained in a way that I don't
Speaker 2: think we have seen in America, probably in the last
Speaker 2: half a sect entry James Monroe, the president more than
Speaker 2: two hundred years ago who coined this faaro influence for
Speaker 2: the United States across the Americas, and then Donald Trump,
Speaker 2: so we get the Donrow doctrine. Secretary Marco Rubio has
Speaker 2: made very clear this this is our backyard. This is
Speaker 2: our area of influence, keeping the Americas for the US,
Speaker 2: preventing other countries to set any kind of footprint, and
Speaker 2: I'm thinking mostly about China and also controlling the natural
Speaker 2: resources of the region. The US can do things today
Speaker 2: that previous presidents probably could not do because the price
Speaker 2: of oil will have gone to more than one hundred
Speaker 2: dollars a barrel, and then gasoline prices will have increased.
Speaker 3: If your President Trump says Venezuela is going to turn
Speaker 3: over thirty to fifty million barrels of oil to the US.
Speaker 3: Here's what is. Energy Secretary Chris Wright said about that
Speaker 3: on Wednesday at a Goldman Sachs conference.
Speaker 6: Look, I'm working directly in cooperation with the Venezuelans, and
Speaker 6: we are going to this is this is the crew
Speaker 6: that's backed up an onshore storage and that's in offshore
Speaker 6: floating storage. It's going to get that crude moving again
Speaker 6: and sell it it just like we did in our businesses.
Speaker 3: Or thirty to fifty million barrels sounds like a lot
Speaker 3: of oil, is it in the grand scheme of things.
Speaker 2: It's not. I mean that is at the high end
Speaker 2: of that range. Fifty million barrels is only half of
Speaker 2: what the world consumes in one day, so it's basically
Speaker 2: twelve hours of global oil consumption. But you put fifty
Speaker 2: million barrels of Venezuelan and oil into the US golf
Speaker 2: of Mexico coast kind of refining system, that's going to
Speaker 2: have an impact. I mean, that is really going to
Speaker 2: overwhelm the market and same prices down. But also more importantly,
Speaker 2: getting that oil flowing will allow the Venezuelans to keep
Speaker 2: production where it was in December close to a million
Speaker 2: barrels a day because they were in a position where
Speaker 2: they will have to shout down production because they didn't
Speaker 2: have anywhere to put the oil, because they were not
Speaker 2: able to esport the oil. So it's not only the
Speaker 2: impact that oil that is the storage will have on
Speaker 2: the American market. Is also that Venezuela kind of start
Speaker 2: the recovery process, although these are really baby steps.
Speaker 3: What the US control of Venezuela's oil could mean for
Speaker 3: two of its biggest rivals, Russia and China, that's coming up.
Speaker 1: Are you concerned about increasing tensions with Russia or because
Speaker 1: of your tankard seizures? And how does the US action
Speaker 1: in Venezuela impact the ongoing relationship with China and the
Speaker 1: President's relationship.
Speaker 7: With President she I think the President has very open,
Speaker 7: honest and good relationships with both President Putin and Russia,
Speaker 7: and also President she of China.
Speaker 3: The effects of President Trump's attack on Venezuela and the
Speaker 3: arrest of President Nicolas Maduro are being felt beyond the
Speaker 3: Western hemisphere.
Speaker 7: We've seen now five vessels seized after the latest action
Speaker 7: reported by US Southern Command. Today, US Force is seen
Speaker 7: boarding that vessel identified as the Olina.
Speaker 3: On Friday, the US Coast Guard seesed another sanctioned oil tanker,
Speaker 3: as the Trump administration continues to crack down on so
Speaker 3: called shadow vessels. These are tankers using murky tactics to
Speaker 3: transport oil from countries facing US sanctions like Russia and Iran.
Speaker 3: A lot of that oil winds up in China, which
Speaker 3: has been a big investor in Venezuela. It's poured money
Speaker 3: into the country's infrastructure and oil refining capacity part of
Speaker 3: its Belt and Road initiative that includes extending and consolidating
Speaker 3: Chinese influence around the world, including in Latin America. So Haafer,
Speaker 3: what does it mean for the world's second largest economy,
Speaker 3: Maduro being removed in President Trump promising these big changes
Speaker 3: to Venezuela's oil industry.
Speaker 2: I think that for China, I mean, first of all,
Speaker 2: they're going to lose access to a source of cheap oil.
Speaker 2: Venezuela was forced to sell his oil at a significant
Speaker 2: discount to China because China was the only buyer. So
Speaker 2: China all the sudden is going to have to find
Speaker 2: a replacement. There is oil in the market that can
Speaker 2: be used to replace Venezuela and oil. Canadian oil is
Speaker 2: of similar quality, but Canadian oil trades around eight to
Speaker 2: ten dollars higher. So that's that's an extra cost. I mean,
Speaker 2: is that gonna really have a massive impact on the
Speaker 2: Chinese economy. As you said, the second largest economy is
Speaker 2: not big enough to really move the needle of the GDP,
Speaker 2: but for some oil refiners in China, they're gonna notice.
Speaker 2: It's more importantly, I think it's the it's the signal
Speaker 2: that the Chinese authorities get out of the Americas. That
Speaker 2: seems to be the message from the Trump administration. These
Speaker 2: are the countries where we have influence, and this is
Speaker 2: our oil, and it's for us to decide. For Russia,
Speaker 2: that's more complicated. President Trump is really driving the price
Speaker 2: of oil down. Russia is selling now oil as low
Speaker 2: as forty dollars a barrel, and by now Vladimir Putin
Speaker 2: also has lost a two that I think he was
Speaker 2: trying to use with President Trump, which was in exchange
Speaker 2: for some kind of deal in Ukraine. Look at the
Speaker 2: oil fields of Siberia. Your American oil companies can have
Speaker 2: access to the Russian oil riches. Well, President Trunk can
Speaker 2: turn around and say, Bladimir, thank you very much for
Speaker 2: your offer, but I control Venezuela now, so you know,
Speaker 2: get lost. American refiners, particularly those in Texas and Louisiana,
Speaker 2: love Venezuela and oil. Most of the Venezuelan oil looks
Speaker 2: more like syrup or even marmalade. It's really biscuits, very
Speaker 2: dense and therefore relatively more difficult to refine. The refineries
Speaker 2: in the US are built precisely to process that kind
Speaker 2: of crude. So while the quality is low, it would
Speaker 2: be a mistake to think that low quality means we
Speaker 2: don't like the oil.
Speaker 3: Any plan to rebuild and deploit Venezuela's oil production capacity
Speaker 3: would be complicated. It could take years and cost upwards
Speaker 3: of one hundred billion dollars according to some estimates.
Speaker 1: But if all.
Speaker 3: Goes well, big Oil could make a lot of money
Speaker 3: in Venezuela. Chevron, the second biggest US oil company, operates
Speaker 3: there and accounts for about twenty five percent of the
Speaker 3: country's output, and refiners like Sitco in the Gulf of
Speaker 3: Mexico are uniquely poised to benefit.
Speaker 2: Did they know exactly what was going to happen? I
Speaker 2: doubt it. I don't think that the American oil industry
Speaker 2: have knowledge of exact military plans or even that Trump
Speaker 2: has already taken the decision to take Maduro. I will
Speaker 2: be very, very surprised about that. Oil companies are in
Speaker 2: some cases, when you are talking about big oil is
Speaker 2: always the case, they're like mini countries. They have almost
Speaker 2: like their own diplomatic surveys who is working on potential
Speaker 2: outcomes in potential scenarios in oil rich countries like Venezuela.
Speaker 2: There's more than an interest. Chevron is already there. Let's
Speaker 2: not forget that American's second largest oil company has to
Speaker 2: stay in Venezuela. Has fought very hard over the last
Speaker 2: twenty five years, not only with the government in Venezuela,
Speaker 2: but so with several administrations both on the left and
Speaker 2: on the right and the White House to be able
Speaker 2: to keep his operations there in some way. So there
Speaker 2: is interest. I mean, is that interest means that everyone
Speaker 2: in big oil is going to be investing billions of
Speaker 2: the last in Venezuela tomorrow. And now, I mean the
Speaker 2: price of oil is low, investors are putting pressure on
Speaker 2: companies to go easy on spending. So the interest may
Speaker 2: not transform in in media the spending, but oil companies
Speaker 2: always go to where the oil barrels are.
Speaker 3: President Trump has floated reimbursing companies for spending money on
Speaker 3: improving infrastructure Venezuela, even using taxpayer dollars to do that.
Speaker 3: In your view, is that essential? Would they do this
Speaker 3: otherwise or they need to have some sort of incentive
Speaker 3: like that.
Speaker 2: I think that probably they would like backstop by the government,
Speaker 2: perhaps loans, back back up by the Esport Import Bank
Speaker 2: of the United States. Again, that's not new. It happens
Speaker 2: in many other projects at the moment. Some of the
Speaker 2: biggest oil companies in America have some kind of loan
Speaker 2: guarantees from the US to invest in places like say
Speaker 2: Mozambique on natural gas LNG projects. So that's what I
Speaker 2: think that they are talking about direct subsidies. I will
Speaker 2: be very surprised about that. I mean, what the hell
Speaker 2: the US government would be subsidized in the oil industry
Speaker 2: when they can make it back perfectly fine in drilling
Speaker 2: in s Texas, New Mexico, Oklahoma. I would not understand that.
Speaker 2: But what I know, David, over the last few months,
Speaker 2: I have been surprised of what the Republican Party does
Speaker 2: to the American capitalist system. I mean, I thought I
Speaker 2: was about getting the government out of companies, and the
Speaker 2: White House is about getting equity in companies. So I
Speaker 2: don't know. I mean, will I be surprised if the
Speaker 2: US owns an equity stake in oil fields that they
Speaker 2: are owned by American oil companies in Venezuela.
Speaker 5: Yeah.
Speaker 2: A year ago I would have said yes, I will
Speaker 2: be very surprised. That's not going to happen today. I
Speaker 2: don't know.
Speaker 3: Maybe we hear President Trump making this geopolitical argument for
Speaker 3: taking control of the Venezuelan oil industry. He's making an
Speaker 3: economic case to the American people as well. What is
Speaker 3: the reward he's promising US citizens and how long does
Speaker 3: he have to make good on that promise.
Speaker 2: I think that the rule he's promising to US citizens,
Speaker 2: and particularly ahead of the Midtown selection, is I get it.
Speaker 2: Inflation has been a big problem, and I'm fixing it.
Speaker 2: And at least he's fixing one of the most visible
Speaker 2: prices for Americans on a daily basis. Almost everyone who
Speaker 2: is commuting to war going with to drop the kids
Speaker 2: at the school, et cetera, et cetera. Sees the price
Speaker 2: of gasoline on the big signs of the pumpa stations,
Speaker 2: and I think that his promise to the American citizens
Speaker 2: is We're going to fix the price of oil. We're
Speaker 2: going to fix the price of gasoline. And by the way,
Speaker 2: this is not a quack mare in the Middle East,
Speaker 2: kilometers away in a place that you have never heard of.
Speaker 2: This is it by doing it jus round the corner
Speaker 2: across the Caribbean, in our backyard.
Speaker 3: This is the Big Take from Bloomberg News. I'm David Gerat.
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