07/17 Closing Prices / revised 07/18/2024 07:33 GMT |                                   07/17 OPEC Basket   $84.56   +$0.12 cents 07/17 Mexico Basket (MME)  $76.44   +$1.47 cents  | 06/31 Venezuela Basket (Merey)   $69 23   -$1.22 cents| 07/17 NYMEX WTI  August CLQ24  $82.85 +$2.09 cents | 07/17 ICE Brent Sept  BRNU24  $85.08 +$1.35 cents  | 07/17 NYMEX Gasoline Aug RBQ24  $2.50 + 1 %  |  07/17 NYMEX  Heating Oil  Aug  RBQ 24 $2.49  +1% | 07/17 Natural Gas August NGQ 24    $2.04   -7%  | 07/12 Active U.S. Rig Count (Oil & Gas)    584  -1  | 07/18 USD/MXN Mexican Peso   17.7334 (data live)  | 07/18 EUR/USD   1.0929 (data live)  | 07/18 US/Bs. (Bolivar)   $36.5407000 (data BCV) |

Chevron and Venezuela’s Milkmaid Fable – Luis A. Pacheco/La Gran Aldea

“Let us not forget that the destruction of the national oil industry is a direct consequence of the policies implemented by the socialism of the 21st century during the last two decades.” (US News)

By Luis A. Pacheco

The recent approval of a special permit for the US oil company to operate in Venezuela has stirred hope for economic and even political change in embattled and impoverished South American nation. The impact of Chevron’s renewed activities will be temporary: we will need more than a limited license to recover the country.

“This milk sold,
it will give me so much money,
and with these funds
I want to buy a basket of eggs
to get a hundred chickens, that in the summer
surround me singing cluck, cluck.

Of the monies I get
for so many chickens I will buy a pig;
with acorn, bran,
cabbage, chestnut it will fatten no end,
so much so that it may be that I get
to see how his belly drags.”

(The Milkmaid (fragment). [1]
Felix Maria de Samaniego (1745 – 1801)

One of the many things I owe to my mother is the high value she imparted to us on having a proper education. An example is her buying, probably in installments, of the “Enciclopedia UTEHA Para la Juventud“, a kind of abridged British Encyclopedia in Spanish.  She bought it from a traveling salesman, and my mother undoubtedly trusted that her children would be more illustrated by being exposed to the celebrated collection.

Ten finely printed volumes containing pieces on universal history and literature, among other general culture materials. Although I remember little of how much or how little I read, from time-to-time fragments of those adolescent readings emerge from the deep recesses of memory.

The license granted to Chevron Corporation by the US government to resume part of its oil operations in Venezuela made me recall one of the fables I discovered on those volumes during my childhood. Written by Felix María de Samaniego, a Spanish neoclassical fabulist, La Lechera or The Milkmaid, came with an indelible engraving that still sticks with me as a very fond part of my early reading adventures.

In late 2022, the US Department of Treasury’s Office of Foreign Assets Control (OFAC) issued a General License (GL) 41, authorizing Chevron Corporation to restart limited oil extraction operations in Venezuela.

This license was not unexpected, and many had worked towards it. Chevron, obviously, played the leading role, but also others who regard the sanctions against Petroleos de Venezuela, the state-owned oil company known as PDVSA, as the primary cause of all our ills. Also, many others also took part hoping to get a short-term benefit from the special permit.

It is only natural for the Maduro regime to rejoice at this partial breach in the wall of economic isolation, primarily of their own making. Not surprisingly, the regime has portrayed the license as a political victory at little or no cost to them.

There is no doubt that for Chevron, the license is a path to start getting some paid back of the self-inflicted maze of debts. Being the “last of the Mohicans” in a country whose oil policy is designed to scare away “imperialist” capital and welcome politically kindred partners has been a strategy that has yielded little gain for the American company. Chevron’s management will try to sell this “win” to its shareholders as a small vindication of its past decisions – we’ll see.

At first, the GL 41 license has generated an understandable hope in parts of Venezuela’s society that it may mark the beginning of an economic recovery that mimics a sequence that began more than a century ago: more oil, better life. But, even more significant, some see it as the first rung of the steep ladder toward political change.

Experts and laypeople are betting that a new wave of oil investment will boost the economy and that this, together with the flexibilization of the political isolation that the regime has imposed on itself, will rekindle Venezuela’s economic growth options.

In Samaniego’s fable, the milkmaid, on her way to the market, imagines everything she will be able to do once she sells the milk. First, she dreams of buying eggs; these, in turn, will hatch into chickens that, once sold, will allow her to buy a pig and so on until purchasing a cow and a calf.

That the oil industry is essential to any economic recovery in Venezuela is indisputable. But times have changed, and even with oil production, Chevron, and others to come, the destruction of the national economic apparatus is such that it will never be enough. Moreover, license 41 is but a small oasis in the vast desert in which 21st-century socialism has transformed the national oil industry, so the real impact that Chevron’s activity can have on the short and medium term should be modest.

Many experts tell us that the political confrontation with the regime has led nowhere and advise that the strategy embodied by license 41 to Chevron is our best option to get out of our current entanglement. That may be so, but let’s not forget that the destruction of the Venezuelan national oil industry -and the economy in general- is a direct consequence of the policies implemented during the last two decades. Hopes may be high, but without political change, it is unlikely they will lead to concrete, sustainable developments, especially in the economy.

Chevron will do everything in its power to recover production from the fields where it participates, and the money owed to them. On the other hand, Chevron’s renewed activities may trigger some economic activity but will be more a temporary consequence than a business objective of License 41 or those that may follow. Meanwhile, the regime, as it has already shown, will remain entrenched behind its ideological walls, postponing all change – change is your worst enemy.

In Samaniego’s fable, the milkmaid gets lost in her fantasies of future wealth, stumbles, and drops the jug of milk on which her dreams depended dearly. But, of course, an oil field is not a milk jug. Still, we will need more than a limited license to recover the country. The protracted political battle of the last two decades has left us exhausted, impoverished, and perhaps ready to bow to the deceitful truce offered by locals and strangers – until the jug falls off, and even Chevron finds itself hoodwinked.

“With this thought
alienated, jumps in a way
that at his violent leap
the jug fell. Poor Milkmaid!
What compassion! Goodbye milk, money,
eggs, chickens, piglet, cow and calf.

Oh, crazy fantasy!
What palaces you build in the wind!
Moderate your joy,
lest jumping for joy,
contemplating happy your future,
you break your jug of hope.

Don’t be ambitious
of better or more prosperous fortune,
that you will live anxiously
without being able to be satisfied with anything.
Do not long impatiently for future good;
Look, not even the present is safe.”

Fragment

[1] Free translation from the original Spanish text.

_______________________________________________________________________________________

Luis A. Pacheco has 40+ years of experience in the energy sector, including 17 years in the Venezuelan oil industry (1986-2003), where he held several senior positions including CEO of BITOR and Executive Director of Corporate Planning. From 2008 to 2016, he was Senior VP of Strategy and IT in Pacific Exploration and Production, Colombia and Peru’s largest private oil & gas company. He holds a Mechanical Engineering degree from the University of Zulia, Venezuela; also holds a M.Sc. degree from Manchester University and a PhD from Imperial College of Science and Technology, University of London. From 2019 to 2020 was president of the Administrative ad hoc Board of PDVSA. Nowadays is a non-resident Fellow at the Baker Institute in Rice University. Energiesnet.com does not necessarily share these views.

Editor’s Note: This article was originally published in Spanish by La Gran Aldea on January 25. a version in English was publish by Zignox on January 31. All comments posted and published on EnergiesNet.com or Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of EnergiesNet or Petroleumworld.

Original article

Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.

energiesnet.com 02 03 2023

Share this news

Support EnergiesNet.com

By Elio Ohep · Launched in 1999 under Petroleumworld.com

Information & News on Latin America’s Energy, Oil, Gas, Renewables, Climate, Technology, Politics and Social issues

Contact : editor@petroleuworld.com


CopyRight©1999-2021, EnergiesNet.com™  / Elio Ohep – All rights reserved
 

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission fromPetroleumworld or the copyright owner of the material.

 
 
Scroll to Top