Stepping Up

 We’ll head Down The Rabbit Hole shortly but first…Reuters reports that US Ambassador to the UN, Linda Thomas-Greenfield, announced another more than $171 million USAID humanitarian assistance package for Venezuela.

 $84 million will be allocated to provide direct relief to Venezuelans still in the country while $31 million will help with the economic integration of Venezuelan migrants in Colombia and Ecuador. The remaining funds will support a number of programs for Venezuelans and their host communities covering emergency shelter, healthcare access, and protection of vulnerable groups. This is in addition to the $376 million the US pledged in September. Looks like the US is stepping up.

 Then we have The Independent reporting that in addition to the $171 million pledged by the US, various other countries pledged funding to help both Venezuelans still in the country and Venezuela migrants bringing the total new humanitarian aid to Venezuelans to $855 million.

 The new funding is much-needed as the UN humanitarian coordinator in Venezuela, Gianluca Rampolla, said last year’s plan was only funded at 34%. The UN said in September it needed $795 million to help 5.2 million Venezuelans with health, education, water, sanitation, food, and other projects inside Venezuela (How’s that 21st Century Bolivarian Socialism working out for ya’?) while a coalition of organizations assisting Venezuelan migrants put their needs at $1.7 billion. (That’s 7.1 million more Venezuelans that need help putting the total at 12.3 million people whose lives are in a shamble due to Nicolas Maduro and the Chavista’s 21st Century Bolivarian Socialism)

 Just a reminder, besides the UN plan in Venezuela being funded at only 34% we have the Chavistas in the process of passing legislation to add a lot of government controls and regulations for NGOs operating in Venezuela which will hamper the efforts of some and force others to discontinue operations in Venezuela, as happened in Nicaragua when Maduro’s fellow authoritarian (dictator), Daniel Ortega, initiated a similar law.

 Don’t forget that as we’ve previously told you that the amount of aid to migrants from Ukraine is 5 times the assistance to Venezuelan migrants and Syrian migrants have received 10 times the humanitarian aid for Venezuelans.

 Then we have Court House News telling us that the 11th Circuit Court in Atlanta rejected an attempt by PDVSA (Venezuela government-owned oil company) to intervene in a racketeering and anti-trust lawsuit.

 PDVSA was seeking to replace a trust as plaintiff in a lawsuit against Russian oil corporation, Lukoil and others. The three judge panel ruled it could not overturn a Florida federal judges’s decision to deny PDVSA citing the State Department’s position that the Maduro government is illegitimate, as are it’s entities including PDVSA.

 And we have BA Times reporting that Venezuela’s TSJ (Supreme Court) annulled an article of the Venezuela Military Justice Code that criminalized homosexuality within the armed forces. Way to go Chavistas! You’ve made a bold leap into the 21st century.

 Now, let’s go Down The Rabbit Hole…

 Chapter 3 continued…

 …Now that’s the oil business in general. For Venezuela it gets a bit more complicated…and expensive. The existing oil fields in Venezuela are a combination extra-heavy, heavy, and less-heavy oil but not the light sweet crude found in some areas of the world. Most of the recently discovered reserves are of the heavier variety. They require mixing-in of dilutants before it’s usable, which is expensive and also limits which refineries can receive the oil. If you have been receiving light sweet crude from the Middle East you can’t just switch to Venezuelan crude. That limits the customer base or requires upgrading refineries, a very costly proposition.

 As you might expect, PDVSA exploited the lighter and most easily extracted and processed oil first leading to thousands of existing wells and reaching a high of 95 drilling rigs in operation in 2011. Now most of the existing wells have fallen into disrepair due to lack of maintenance and the drilling rig count is, at most, 20 operational drilling rigs, and that’s on a good day. Some days there are zero, yes ZERO, rigs in operation!

 While oil production dropped from it’s all-time high under Chavez to approximately 2 and 1/2 million bpd (barrels per day) it didn’t fall off a cliff until Maduro came along and last year was at just over 600,000 bpd and that’s up from under 500,000 bpd a couple of years ago. Anyone who has ever owned a car, a home, or almost anything, for that matter, knows that without maintenance things break down. The Chavistas either failed to grasp this or simply didn’t care. They were too busy siphoning off all the profits to fund their ever-expanding social programs, referred to as “Missions”, or simply lining their pockets. Worse yet, as we discussed when we talked about hospitals, they engaged on an unprecedented (and unnecessary) borrowing spree.

 Any rational person could see the outlook for the future wasn’t exactly rosy. Well, there are a couple of other factors that would have a negative impact as well. Take, for example Petro Caribe.

 The Chavez vision of “21st Century Bolivarian Socialism” wasn’t just about Venezuela being an economic power but a political one as well. He began engaging countries throughout Latin America and the Caribbean in multilateral organizations like ALBA, CARICOM, MERCOSUR, UNASUR, and so on. In order to support Chavismo policies they set up Petro Caribe whereby Venezuela would use it’s ability to provide oil to the 17 members on unbelievably favorable terms in return for solidarity with their “Bolivarian Revolution”. The members, of which Cuba is a de facto member, were able to buy oil, per their various quotas and terms tailored to the country’s specific needs and ability to pay, for anywhere from 5% to 50% upfront, then a one or two year grace period, then finance the balance for a term of between 17-25 years at 1% interest. PDVSA would also allocate funds for member country’s social programs (while also funding Chavismo’s “Missions”) and partnering in various refining and power generation projects among member countries. While the available quotas were somewhat higher, Petro Caribe supplied, on average, approximately 100,000 bpd to the member countries and another 98,000 bpd to Cuba. It’s worth remembering that Cuba paid nothing upfront in return for supplying medical, military, and security personnel to “The Revolution”. 

 More tomorrow….

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