Machado's $1.7T energy budget is excessive

Maria Corina Machado is ripping off the international community by overpricing Venezuelan petroleum recovery, to the exorbitant figure of $1.7 trillion. As it has been extensively discussed during the last few articles, upgrading the entire petroleum and electrical grid and pipelines and roads for most of South America: with an emphasis on Trinidad and Tobago, Suriname, Guyana and Venezuela as the energetic hub of the Americas, would only cost below $800 billion. Why is María Corina Machado overpricing double for only one country? You can do the job for several countries at less than half of a figure she proposes. In order to achieve that, she is thanking Donald Trump for a ridiculous regime change bribery, that has been dismissed by the presidents of Mexico, Honduras, Colombia, Cuba, and a number of political movements in South America and Africa.

It is unfortunate that nobody presents a detailed breakdown of how that $1.7 trillion will be used. Building brand new upgraders for all Orinoco fields: Zuata, Machete, Cerro Negro and Hamaca so that they can each process 2 million and a half barrels, would only cost $8 billion each. So theoretically, just with a $32 billion investment, you can make Venezuela refine 10 million barrels of oil per day, from heavy crude to synthetic crude. That is more than what Saudi Arabia produces. That would of course be an ultimate target, considering that recovering Zulia, Anzoátegui and Monagas conventional oil fields will actually be a lot cheaper and faster. You will need steam injection polymers, and various enhanced oil recovery methods that have been extensively discussed elsewhere, which are common knowledge of the petroleum industry right now.

Something similar is happening in Argentina with Vaca Muerta. They know they can produce at profit, with only $45 per barrel. Recovering the Guri electrical facility would be only $1 billion. Recovering other hydroelectric electrical power facilities would be perhaps five extra billion dollars. Road projects for all of South America, amounting to more than 50,000 kilometers, is only 170 billion. Upgraders for all of Latin America: including Brazil, Guyana, Peru, Ecuador, Mexico would probably be an additional $200 billion dollars. What more overpricing do you want? You won't get to $1 trillion unless you start inventing unneeded costs. Where is the breakdown for $1.7 trillion? You can't just punch figures to the international community and expect that they will sign you checks for $1.7 trillion.

Such checks to be issued for $800 billion should not be expected either, for the entire continent. Even though that's a lot more reasonable and a lot more conservative. Proof must be provided that accounting is sound. Extra costs should not be incurred as we avoid ripping investors off. Small amounts cannot be advertised either, else the project would be incomplete because of underinvestment: many times underinvestments result in loss. We should not just produce figures and play with them, adding a multiplier to increase unexpected cost to 30% rather than 15%. That is unreasonable for huge projects. Of course multipliers are used, but thorough revision must be provided case by case. Forty, fifty, sixty such cases must be audited to verify that the multiplier is actually working.

Venezuelan opposition has provided a Venezuela land of grace plan over the years, but nobody knows what is in there. Perhaps planners know that all improvements we need are less than $1 trillion, and they are adding an extra trillion dollars just for commissions and corruption. We want to get out of corruption. We want to provide to the international community sound energy and mining projects within South America that are environmentally responsible. Planning should take care of local cultures, indigenous cultures, mestizo cultures, providing training and education so that we suffer no oil spills and no environmental degradation in mining areas. All that costs a tiny fraction of the cost of a brand new upgrader. Figures are usually counted in millions of dollars, not billions and much less trillions. Guri Dam, which is one of the biggest in the world, only needs $1 billion for refurbishment. In Brazil, Paraguay and Argentina, they have several such hydroelectric dams, each of them also need perhaps another billion dollar investment.

Renewable energy projects can also be added. Thermal energy projects can also be added in all countries. You add them up and the aggregate cost would be $300 billion rather than $200 billion, because some cases would be missing at first glance. But still, the numbers don't add up to $1 trillion yet. It probably wouldn't be sound to take absolutely the whole continent with every single facility to be upgraded, because that's not needed either. What we are looking for is a sound starting project, that will benefit all of South America, Central America and the Caribbean simultaneously. Calculations also include Cuba Cienfuegos refinery and development of offshore exploitation of Varadero fields north of Cuban coast. For Venezuela it is important that Cuba starts producing and refining their own oil, so that Venezuela doesn't have to subsidize it forever.

In the geopolitical aspect, María Corina Machado is dismissing Guyana, Trinidad & Tobago and Suriname because she wants Venezuela to be the only oil hub. That's not regionally sound. Venezuela, Suriname, Guyana, and Trinidad & Tobago should be bundled together, including their oil and electric industries. They share the same Guyana shield in the continent. All they need are more roads, pipelines and refineries between them in order to produce economies of scale. Presidential candidates in Guyana should comment on this, because at this point it really doesn't matter who will be the ultimate owner of Essequibo. Rather than debating either national sovereignty, regions deserve to be treated individually: such as Cuyuni-Mazaruni, Barima Waini, Delta Amacuro or Bolívar. Regions are more important than countries because regions are the ones that provide the economic development, which is taken by countries through taxing for their corruption. It is best to be sympathetic to the regions while dismissing the countries.

Constant infighting between countries for a territory results in never providing any services to its remote population. They only ask residents of Cuyuní Mazaruni region or of Sifontes municipality for voting, while they still have dirt roads, and they have to mine gold in miserable conditions. Neither the Guyana nor the Venezuelan government do absolutely anything for them. Maybe all of these regions will be taken care of by energy or mining companies. It is a widely known fact that Chevron in Zulia state near Boscan or eastern Lake Maracaibo shore have many educational and health programs. Does ExxonMobil take care of the indigenous populations within Guyana? Venezuelan narrative about Exxon Mobil is the worst of the seven sisters. It is claimed as predatory. Perhaps they realize that opportunities are in this continent, while Guyana with a new presidency, or with this presidency if reelected with more experience might toughen conditions on them.

Oil companies at Stabroek know they may produce profitably at $40 a barrel. Vaca Muerta is profitable at $45 a barrel. Machete, Zuata, Hamaca, and Cerro Negro are profitable at $50 a barrel. That is assuming all greenfield investments that must be made, which as described add up to significantly less than $1.7 trillion. Hyperboles and superlatives are a gamble. The United States is gambling when they offer $50 million to anyone who would capture president Maduro, as the bounty was increased from $25 million to $50 million. Eric Prince once said that he was actually expecting $100 million. We might remain in this impasse for a few months, then early next year the United States could increase the bounty for president Nicolás Maduro for $100 million.

Politically this is not making any sense. The rest of the world is laughing at the idea, especially because everybody knows president Maduro is in Miraflores Palace, and he was in La Guaira yesterday. He is visible all over Venezuela every day. He is not clandestine. The crucial fact is that María Corina Machado is asking the United States to increase the bounty for capturing Maduro, whose capture would probably cause a civil war, conditioning that $1.7 trillion must be invested in projects that do not need that amount.

Current project, which is already 800 billion dollars,would have to extensively address Mexico and Brazil. I have covered some parts of Brazil: North Brazil and a small portion of south Brazil and southwest Brazil. But easternmost Brazil from Rio de Janeiro to Bahía I has not covered yet. Mexico does not extend West, beyond Tabasco and Campeche. It was deemed unnecessary to cover the North American portion of Mexico, as I don't want to increase my project more than I am comfortable with the price tag it has. Do I have to increase the price tag of my project so that it does earn credibility? If you are a supporter of the free market, projects that involve government should not be that gigantic, in the hope that along with the government you get a reasonable price tag, and you let the free market invest in the remaining areas.

We must be careful on allocations that we would have to make, between different South American countries, so that Venezuela represents the rest of South America in OPEC. I envision Venezuela's future in OPEC as extensively discussing, with the rest of the countries, what could be the oil production expectations of all of the South American countries: concentrating initially in Guyana, Suriname, Trinidad & Tobago and northern Brazil. Then would follow Argentina, Bolivia, Paraguay, Peru and Ecuador. Colombia would be last because it seems that Gustavo Petro is not friendly to oil production, which is a shame: there could be great economies of scale if we could cluster Caño Limón and Guafita, which are both important Barinas and Llanos oil fields a few kilometers apart, just separated by the Arauca River international border.

To exceed this project beyond $1 trillion, what could be done is a huge investment in the mining areas to the most up to date technological refinements, so that mines are pristine. There are probably experimental ways of mining that are extremely expensive and that do not disrupt the environment. In that case, those who want gigantic project numbers exceeding $1 trillion, so that it looks beautiful on paper, would ask if politicians and markets are committed to such gigantic investments, risking no return. We should concentrate on investments that we know will provide a return such as Santos, Potiguar, Vaca Muerta, Orinoco Belt, Monagas, Anzoátegui, Zulia, Caño Limón. A lot of money has to be devoted in cleanup for Ucayali and Loreto in Peru, and several Estaciones and Oficinas in northern Chile, where copper mining was abandoned. Lakes Maracaibo and Valencia must be cleaned up. Arco Minero needs to be cleaned up. We must check thoroughly what are the environmental considerations in Vaca Muerta.

We haven't heard much about environmental issues in Guyana, probably there are plenty of them. Indigenous groups are actually quite vocal,they are invited to join the discussion. If we were to honor María Corina Machado's call for a $1.7 trillion investment in South America, at least let's allocate that $1.7 trillion in projects that are needed. We need to identify such projects. There should also be a discussion on what projects must be dismissed. For example, Salar de Uyuní in Bolivia holds massive lithium reserves. Is lithium going to be produced there? will the market shift completely to Argentina and Chile? Is there a way for Bolivia to also present a project within the 1.7 trillion proposal exposed by María Corina Machado? That amount suffices for all countries. Well planned budgets are not that hugely expensive.

There are many ways to cut costs. It is crucial to realize where there are inefficiencies. Let's help Bolivia develop Salar de Uyuní in an environmentally friendly way, acceptable to indigenous population. Eventually they will realize it's not in their best interest to just leave the market open for only Chile and Argentina. Prioritizing roads is meant to provide connectivity through pipelines and through fiber optic communications, so that we don't have to depend so much on satellite communications for remote areas. If you connect through trunk roads all across the continent, the need for satellite communications will decrease. You will be able through fiber optic to have high speed internet everywhere. The road between Manaus Porto Velho communicates the states of Rondonia and Amazonas. It is cluttered with Brazilian telecommunications company repeaters every 100 kilometers. That road needs a huge upgrade.

If we develop a pipeline system that can transport petroleum from San Jorge gulf to Vaca Muerta, to Chaco, to Santos, Potiguar, Suriname, Stabroek and the existing Venezuelan network, we will transcend a northern South America hub. We will have a full continental development, which will probably be the most important oil producing region on the planet, in close competition with the Arabian Peninsula. Does the United States want that? Maybe the United States would prefer to have to deal with only one country. However, what Maria Corina Machado is asking is not feasible because she would be asking the United States to abandon Guyana to embrace Venezuela. That doesn't make any sense. Venezuela and Guyana must embrace themselves first, so that United States embraces both.

Presidential campaign continues in Guyana, ruling PPP is campaigning hard. Challengers such as Azruddin Mohamed and other candidates would like to improve things in Guyana. Irfaan Ali has done a good job, but it could be improved. Unfortunately his relationship with Venezuela has been hostile, especially due to Robert Persaud. Should we really treat ourselves as friendly neighbors? That is not the case nowadays. Maybe if an opposition candidate wins, relations with Venezuela will improve. If Irfaan Ali is reelected, I wish him well because I still think he's a good president. But maybe someone else could be better. We'll see. I really wish the Guyana elections are performed peacefully, and that Guyanese are conscious of their decisions. They should transcend their tribal black versus indian fight, which now combines Venezuelan migrants: newest ethnic group in Guyana. Let's hope they multiculturally vote for the benefit of Guyana, in perfect oil and mining integration with neighbors Suriname, Trinidad & Tobago, Venezuela and Brazil. Because what Maria Cororina Machado calls the hub, the energy hub of South America is not only Venezuela. It is also Guyana, Suriname, Trinidad & Tobago and perhaps areas of northern Brazil.