Jorge R. Pinon does not want US politicians to become so concerned about Venezuelan President Hugo Chavez or a possible Chinese presence in Cuba that they overlook the rest of the Western Hemisphere.
Excluding Canada, the area supplies US 32% of the US’s total oil and gas imports, Pinon said during a recent presentation to the US Energy Association. And he also thinks Mexico could face bigger problems than Venezuela.
“It does not have Venezuela’s integral and inherent resources. What’s more, [state oil firm Petroleos Mexicanos] has never learned how to behave in an entrepreneurial way. From a stewardship standpoint, it doesn’t know how to take the country forward,” Pinon said.
A former executive with Shell Oil Co., Amoco Corp., and BP PLC before his retirement in 2003, Pinon said that major oil companies have four tools in their toolbox when they negotiate with South and Latin American governments and national oil companies: capital, technology, know-how, and stewardship.
Continuity matters
“Regime continuity has become very important in the last 5 years. Majors are willing to play by the rules, but they don’t like to see the rules change.” said Pinon, now an energy fellow with the University of Miami’s Center for Hemispheric Policy.
Pinon said it’s important for US policymakers to recognize that an NOC can operate in a more entrepreneurial style than the government. That essentially has made Brazil’s Petroleo Brasileiro SA one of the hemisphere’s 800-lb gorillas, he said.
“[Petrobras] can’t seem to do anything wrong. But it faces challenges including a 5-8 year development timeframe and lack of equipment,” Pinon said. Still, he said, Petrobras and President Luis Inacio Lula da Silva “could be the wedge the US is looking for” against Venezuelan President Hugo Chavez and Petroleos de Venezuela SA.
Venezuela’s potential
If Brazil is an 800-lb gorilla, Venezuela weighs in at 1,600 lb because its resources are considerable, Pinon said. Chavez has diverted PDVSA from its core function, and production from its conventional oil fields has been neglected, but Pinon said this might not last. “If the Venezuelan people under a democratic process decide to change their government, PDVSA’s situation will change very quickly,” he said.
Pinon said that he also hopes US companies get the opportunity to enter Cuba, which has attracted several firms from other countries. “Its production-sharing agreement is awesome. It’s more commercial than Venezuela’s or Ecuador’s,” he said.
As for a Chinese presence in Cuba—a fact that has several US politicians upset—Pinon said Sinopec Corp. has a single onshore lease and it has hired some French firms to do some seismic work there.
“I hope Cuba is not used as a political tool. It potentially has 300,000-400,000 b/d of production down the road. But its internal demand under a free market government could be 350,000 b/d,” he said.
