By Murat Temizer
ANKARA (AA) - Anadolu Agency questioned Luis Pacheco, a nonresident fellow of the Rice University's Baker Institute, on Venezuela's energy sector, its economy and politics.
Pacheco has more than 35 years of experience in the energy industry, including 17 years at Venezuela’s national oil company PDVSA and its affiliates between 1986 and 2003. There he held a number of senior positions, including CEO of BITOR, PDVSA’s heavy oil affiliate, and as an executive director of corporate planning.
He was special adviser on strategy and energy to the president of Venezuela’s CANTV from 2005 to 2007 as well as adviser of the National Hydrocarbons Agency in Colombia.
From 2004 to 2007, he was co-owner and president of a management-consulting firm, working with companies such as Repsol, Pemex and the World Bank, amongst others. From 2008 to 2016, he was senior vice president of planning and information technology at Pacific Exploration & Production, formerly Pacific Rubiales Energy, the largest private oil and gas company in Colombia and Peru.
Pacheco has lectured at Universidad Simon Bolivar in Venezuela and has also been a guest lecturer at the Institute for Advanced Studies in Administration in Venezuela, the University of Los Andes in Colombia, the Monterrey Institute of Technology and Higher Education in Mexico, Harvard University and Georgetown University.
Pacheco received a bachelor’s in mechanical engineering from the University of Zulia in Venezuela, an M.Sc. from Manchester University and a Ph.D. from the University of London.
- Will we see a presidential election in the near future in Venezuela in light of the U.S. support of the opposition, led by U.S. President Donald Trump?
The Lima Group, [a group of 13 Latin American countries committed to closely monitoring events in Venezuela while applying pressure on the Venezuelan government to restore full of democracy in the country] has been pressing for a solution to the Venezuelan growing crisis for some time. The controversial election called by the government in May last year, together with the ongoing migration crisis, has pressed the U.S. into joining the fray. Once the U.S. gets involved, and now important European countries, the situation becomes a pawn in a larger battle that involves China, Russia, and of late Turkey.
So in the short term, we will see a continuous deepening of the humanitarian and economic crisis, since the government can now use the U.S.-imposed sanctions as an excuse for their years-long mismanagement of the economy and won't modify its behavior. Whether those sanctions, plus the international diplomatic pressure, bring the government to its knees is still to be seen. Even if that occurs, elections will take some time to be organized since the electoral authorities need to be replaced, and the Supreme Court needs to be in tow. Alas, a complex situation that can only be resolved if the military forces play fair and support the change. It is difficult to know the time but I will hazard a guess that it will be months.
- What are your predictions on what will happen to Venezuela and the global oil market after April 28, the deadline in which the government has to sell crude oil to the U.S?
The April 28 date appears to have been chosen to coincide with a bond coupon payment so as to avoid putting CITGO [a subsidiary of Venezuelan state oil company PDVSA] in default. Even now, if you look at press reports, there are a number of oil tankers moored in the Gulf of Mexico, with Venezuelan oil waiting to be unloaded because the buyers are not too sure how to proceed and who to pay. There is a similar glut in Venezuelan ports. In any case, the Maduro regime will need to divert cargoes as of now and not wait until April, in order to generate income; and CITGO will need to find alternative crude sources presently. The issue of how CITGO will be managed from now on is still in the air. It is important to understand that CITGO is heavily leveraged and under siege from different quarters as it is the most valuable Venezuelan asset abroad; therefore, it must tread carefully the road ahead.
- How will the traders buying PDVSA oil deal with the U.S.-imposed sanctions by April 28?
American traders and oil companies will abide by the sanctions. The oil market will adjust to the new reality; in fact, they should be doing it right now. In the short term, the sanctions play to the OPEC strategy [from the cartel's 2016 agreement to curtail oil production] since there is still plenty of crude supply, and therefore, the lack of Venezuelan barrels can be mitigated. In six months the effect may be different, depending on whether there is a rebound in demand.
- Can Venezuela find alternative markets and survive without the U.S. market following the ban on oil imports?
- They will need to divert oil to less attractive markets.
- It will become more difficult to buy lighter oils that are necessary to produce its heavy crudes.
- It will be harder to buy gasoline and other fuels it needs for its internal markets since PDVSA has let its refineries run down for lack of maintenance and investment.
- Many experts believe that India and China may be the possible routes for Venezuelan oil. Do you agree?
Indeed, that is the most probable escape route, so to speak. More India than China: the latter indeed does not have the adequate refining capacity for Venezuelan crude. That diversion of volumes will come at a cost, due to the distressed situation and the higher freight costs to those markets. I guess that PDVSA is already making those arrangements directly or through "friendly" traders, without caring too much where the oil goes, as the regime is already doing with gold and other natural resources.
One needs to understand that even though there is not a war in the conventional sense to justify it, Venezuela is in disarray.