Dr Christopher Sabatini
Well, welcome everyone. I hope everyone is safe and healthy and not climbing the walls, in whether self-imposed or otherwise quarantined. I guess this is the new normal, in terms of how, for at least the time being, Chatham House and others will be conducting meetings and briefings. Although, I will say we had planned this webinar to be a webinar well before the coronavirus update. We – outbreak – this has been weeks in the making, and we were going to take advantage of, at the time, Francisco Monaldi’s trip to London to do a webinar for our members. But, of course, now we are confined to doing this virtually anyway, and this is part of a series I want to say that Chatham House – Chatham House’s Latin America Initiative is doing generally on Venezuela. This is really the first of a series of discussions on Venezuela that we’ll be doing publicly and privately to discuss both the economics and politics and diplomacy of – regarding Venezuela.
Now, let me introduce the Speaker and then I’ll quickly go through the format for today. There’s very little, actually, that people agree on within Venezuela. But one of the few things they agree on is that Francisco Monaldi is the pre-eminent expert on energy and oil production. It is – I’m honoured to call him a friend, but he’s also a great scholar and an expert on this topic. And we have over 100 people who have agreed to participate in this, and I think that speaks to not just their boredom, and the fact they’ve probably run out of Netflix alternatives, but also, to the fact that they want to hear what Francisco has to say. At least, we’ll chalk it up to that for the moment.
Francisco is the – he’s a Fellow in Latin American Energy at the Baker Institute at Rice University. He’s also the interim Director of the Latin America Initiative at the Baker Institute. He’s an Economist by training. He has a PhD from Stanford and has been working for a long time on the issues of oil production and energy in Venezuela. And let me turn it over to Francisco to talk a little bit about the state of the Venezuelan oil situation, production, both, and also, of course, the two new changes: the COVID-19 as well as the oil war between Russia and Saudi Arabia that has basically bottomed out oil prices, in particular in Venezuela. And how Venezuela can – if it can ever crawl out of the deep, deep hole it has reached, in terms of oil production. Francisco, take it away, please.
Francisco Monaldi
Thank you very much, Chris. It is a pleasure being with you and I’m very glad that Chatham House is working on this issue. I’m very glad that you are directing those efforts there. So, yeah, so let me start with the current situation. I mean, the situation is really dramatic and catastrophic, because the combination of things happening is really, you know, a perfect storm for the Venezuelan oil sector and for the Venezuelan economy. On the one hand, the collapse in the price that – it’s a combination right now, mostly due to the collapse in demand because of the virus but also, of course, because of the price war between Saudi Arabia and Russia. And the fact that Saudi Arabia and Russia are in the price war has a particular effect on Venezuela in two senses.
One is – Rosneft was the company helping Venezuela avoid the sanctions, and the combination of sanctions, with the fact that now they have their own problems and they have to sell their own oil in the middle of a price war puts Venezuela very low in their priority list. And therefore, that’s one additional sort of factor that affects Venezuela besides just the price collapse.
On top of that, Saudi Arabia is reopening production. A lot of it in heavy oil, so competitor of Venezuela oil and Venezuela mostly has to sell oil in the areas in which it’s competitor with Saudi Arabia, you know, India and China. So, another, you know, sort of additional blow. But in general, of course the price collapse is particularly devastating for Venezuela because basically, a lot of the production now is, you know, it doesn’t cover costs of production. Because – notice that it’s not just the decline in the price of oil, but Venezuela already, because of sanctions, was giving very significant discount, as much, sometimes as, you know, $20 per barrel. So that means that basically, you know, some of the Venezuelan oil today it’s in the low tens, you know, $10-15, some even lower, in terms of their capacity to sell. So, basically, even if they give away their production, it’s going to be hard for it to be sold.
Add to that that the US just imposed, in the last few weeks, sanctions to two subsidiaries of Rosneft, which was the company marketing about a half to two thirds of Venezuelan oil and making a profit on it. And that means that Rosneft basically is not – has stopped helping them, even though they announced that they would continue doing it. Either if it is because they’re figuring out what to do, and now, of course, with the virus, I think they’re unlikely to restart. But the fact is that at least until a few days ago, and my sources in Venezuela tell me that there are no orders of Venezuelan oil for April. So, this is a real catastrophe.
And so, what are the alternatives for Venezuela? Well, they can send a little bit more to Cuba, which they have been doing. But of course, the Cubans’ capacity to store oil has its limits and their, you know, their local consumption, you know, the Venezuelan oil is not what they need. They need, actually, products that Venezuela used to send in the past. They, you know, otherwise can store as much as they can, but they don’t have too much storage capacity left. And, you know, using, like, tankers for floating storage is very expensive right now because everyone else is doing it.
So, basically, Venezuela will have to charter in production, and they are doing it. On top of that, we know that the virus is affecting operations itself, and they just have a facility that blew up, that, you know, was responsible for about 40,000 barrels of production. So, all of these combined means that Venezuela was, in February, producing between 7 and 800,000 barrels and it was something, by the way, that was relatively stable, for the last sort of semester, after a big decline in 2009. But now, you know, the thing is that they cannot avoid the collapse and it’s going to about 500,000.
So, the last year was a very bad year. Particularly the first semester, because the sanctions made Venezuela lose a half a million barrels of export to the United States, and Venezuela also imports around 800 – 100 to 150,000 barrels per day of product, either to blend with the extra-heavy oil and re-export it or to – or for their domestic market because the refineries in Venezuela are in terrible shape. And so that meant that by the, you know, the end of 2018, Venezuela was producing about 1.3 million barrels and, as I said, it declined to about 7 to 800,000 barrels ad now, further to about 500,000 barrels.
But it’s important to understand that the sanctions and the recent events are just, sort of, piling up on top of a spectacular decline that the industry was facing already because of the mismanagement of the oil sector. You know, let me just give you a few figures. In – Venezuela was producing 3.4 million barrels when Hugo Chávez came to power and it had plans to increase production to – very credible, you know, plans, in terms of projects, etc., to increase production to about five million barrels of oil. Chávez benefitted tremendously from the previous opening of the oil industry in the previous administration that added a million – 1.1 million barrels per day of additional production in joint ventures, or, you know, service contracts with the private sector. And despite that production, you know, decline and when Maduro came into power after Chávez died, it was at about 1.7 million barrels. Sorry, 2.7 million barrels, and then it has been, as you know, collapsing. But the important thing is that if you see what other OPEC members did during the oil price boom, they all increased production significantly, whereas Venezuela declined production and prepared the conditions for a collapse, when the price of oil collapsed.
What things did they do that provoked that? First, they fired the top management and about 20,000 of the best technical staff of the national oil company during the oil strike of 2003. Chávez took political control and politicised the company, made it into a social and development ministry, and basically took as much money out of it as he could. The company had to dramatically ramp up debt just to pay the government, and all those conditions, of course, created a very bad situation.
On top of that Chávez, who had benefited from the addition of a million barrels of production, from the private sector, basically, sort of, renat – partly renationalised, kicked out two big players, Conoco and Exxon, or they decided to leave because they didn’t want the new conditions, and basically, made it really unattractive to invest in Venezuela for foreign companies. To give you an idea, not even one of the many, many projects signed during Chávez’ time in power, came to fruition. We have – we don’t have one additional project, in the last 20 years in Venezuela except for one natural gas offshore project, that was totally done by Repsol and ENI, and not by the national oil company.
So, let me just finish these initial remarks, mentioning that the Venezuelan oil industry can be rebuilt, in the sense that it does have a spectacular resource base. It might not be true that Venezuela has the largest reserves of oil in the world, because the concept of proven reserves is not, you know, technically what Venezuela can claim right now. But there is no doubt about the massive resources, and with very low risk, because we know that the oil is there. But most of it is extra-heavy, which poses some difficulties, in terms of, you know, carbon intensity and climate change policy. And the ones that are conventional oil are declining fields that require secondary and tertiary techniques of recovery which, you know, will require investment and companies who know how to do it.
And that, combined with the fact that the national company is totally broke, you know, Venezuela has a debt of more than $150 billion, and it’s going to be exporting less than $10 billion this year. It’s the worst ratio of exports to foreign debt in the whole world, by a significant margin. So, the only way to reconstruct the oil sector in Venezuela is with massive private investment and for that, you know, a lot of conditions have to be met. You know, some degree of political stability, some change in the institutional and legal framework to attract about – we estimate that about $120 billion are required to increase about two million barrels per day, and that would take, you know, anywhere between seven and ten years. And there are estimates that are higher, and a few that are a little bit lower, but the point is that it’s a massive investment that the Venezuelan state cannot, you know, do themselves. And so, one has to wonder, you know, if there will be the political consensus and stability to create the institutions, in terms of regulatory framework, fiscal framework, etc., that are required for that investment to happen. But that’s the big, you know, challenge and without a doubt Venezuela needs to recover the oil sector, to have any chance to recover the rest of the economy.
Of course, there are plenty of other challenges of the restitution, etc., but that’s, you know, their best bet, in the next decade or so, and with that, you know, I close my initial remarks.
Dr Christopher Sabatini
We already have a few questions in the queue. I had a few of my own but let me go ahead. Richard Oblath has a question, let me read it. “Maduro appeared by yearend to have reduced the risk of losing power. Has the combination of COVID-19 and the oil price crash increased the risk for a change of power from Maduro?
Francisco Monaldi
Yeah, well, that’s one of those questions that we all have, and it’s very hard to predict. I mean, this guy has survived, as I said, a collapse, a spectacular collapse in oil production, from when he started about 2.6, 2.7 to, you know, today maybe half a million barrels. And so, he has a fraction of the cashflow and now, imagine, with the picture that I presented before, plus the effects of the coronavirus inside Venezuela, which is the country – among the worst countries, in terms of preparation of their health infrastructure to deal with this. So, who knows? You know, it’s going to be a big challenge to deal with it – with this. I know that – you know, we’re pretty sure about some things. The economy will continue to decline. We thought that the decline was going to change slope to a less sharp decline than the one we had in the last five years. But now, with all these events, I think it’s going to be as bad. And so, imagine a country that has an economy a third of what it used to be, and now will have a significantly bad year. So, this is, you know, unheard of, what we are going to witness in Venezuela.
So – but it’s very hard to know, I mean, with all the different effects of potentially, you know, the population looking for the state to help them in this desperate situation. Or, you know, the fact that the xenophobia, you know, and, you know, the Colombian border being closed, I mean, you never know how societies react to this kind of thing. But it might be that this is what, you know, leads the military to really, you know, co-ordinate and take him out. Because they know that with Maduro in power, you know, the help from the international community, the lifting of the sanctions, all these things that are – that, you know, Venezuela’s only potential opportunity for – to avoid this massive catastrophe are not going to happen. So, that’s a possibility. But, you know, it’s very hard to assess.
Dr Christopher Sabatini
Okay, thank you. You answered the question I was going to ask as a follow-up. Let me – there’s a question from an anonymous attendee, and I’m going to tag my question on top of that. His question, or her question, is, “Is there any hope that Venezuela could wean itself off its reliance on oil?” Let me also add to that, I mean, what do you think is the direction which global oil markets will go? I mean, how long will it take for Venezuela to dig itself out of this huge hole it has, in terms of production? Both in terms of upgrading infrastructure, changing institutions, seeking out private investment, all those things, is there another alternative for Venezuela? And is there a risk that oil markets globally, in a new, sort of, concern about carbon output, may actually, by the time Venezuela catches up, may have moved on to renewables or other sources of energy?
Francisco Monaldi
Yeah. Of course, this is another big uncertainty for the future. I mean, we know that we are very bad at predicting trends of more than ten years, you know, in the energy sector. So, it’s hard to know. My, sort of, best guess is that for the next couple of decades, Venezuela will have an alternative of increasing, you know, oil production, at least the two million barrels, and get back to what it used to produce, and there will be a market for that oil. Although in might contribute to, you know, in some particular moments to an oil glut, and depending on exactly when it happens and other factors, of course, in the world economy.
But without a doubt, combining, sort of, the two questions, I mean, there is no doubt that Venezuela needs to move, you know, I wouldn’t say away, but has to add things to oil and eventually, oil will become less and less an important business. So, it’s not a matter of resources. Venezuela has all the resources. It’s just that they will not be able to, you know, get them out profitably because of the change in the world energy markets. But – and as I said, Venezuela faces the issue that, you know, if there are carbon taxes or things – or policies that affect carbon-intensive industries, it turns out that they already know how well the extra-heavy oil of Venezuela is more carbon-intensive and so we – they will have to deal with that situation.
But the thing is that in the short run, they only, you know, wait for Venezuela to be able to – and you can talk to, you know, IMF Economist or anyone who – all of them are concerned about the dependency of Venezuela on oil. But they all agree that the only way that Venezuela will get the funds to be able to reconstruct the country and to, you know, be able to at least attack this massive humanitarian crisis is – and by the way, the only way that the international community will loan the money that Venezuela requires, which is very significant, is if they believe that they will be able to repay some of it. And for repaying some of it they require the oil production, so there is no doubt that that’s an absolute essential a requirement is to increase oil production.
But there are plenty of other things that should be done. I’m not an expert on, you know, on other – industrial policy in other areas. I do think that we have a spectacular potential on natural gas. Of course, that market is less attractive because prices are much – I mean, before the coronavirus were less, you know, profitable. Now oil is also not profitable in Venezuela, but I think that will change. So that will be one opportunity, natural gas. But other than that, you know, it is very important for Venezuela, as for many other oil producers, to become less dependent on oil.
Dr Christopher Sabatini
Right, another question, and this one is going to come close to home for you, and it’s going to ask you to make a prediction. It’s from another anonymous attendee. “Do you think the Trump administration will extend Chevron’s waiver to operate in Venezuela, said to expire in one month?”
Francisco Monaldi
Yeah, you know, if you would have asked me, like, I mean, the world has changed so much in the last two weeks that two weeks ago, if you would have asked me that, I would say, “It’s unlikely that they will renew it.” Because, you know, the US, after Guaidó’s visit to Trump, was imposing maximum pressure to Venezuela and, you know, the sanctions too rough and they have to reflect that. But also, they were really wanting to get, you know, the private investors, not only Chevron, which is the US operator, or even the Europeans, like Repsol, ENI, Total and Equinor, to sort of diminish their activity there, without a doubt. And so, my sense was that those inside the US administration that favoured getting the li – not renewing the licence to Chevron would win the fight. It has been a, you know, a significant discussion within the administration.
But now, you know, I think that it might be the opposite because, you know, the collapse is so dramatic that nobody needs additional pressure to Venezuela and it is costly to take Chevron out, in terms of, you know, reconstruction of the oil industry in the future. And of course, it’s a US company and the US has interest in, you know, keeping their companies and not, you know, the Russians and Chinese, you know, taking over. So, I think the balance of that discussion might have shift. Of course, as you can imagine, that’s in the very bottom of the priorities this – within the US government of discussion today. But I think it’s more likely than not, right now, that they will renew the licence.
Dr Christopher Sabatini
Great, thank you very much. This one is from Cho Khong, “How dependent is the regime on oil revenue? In terms of other” – and he’s asking specifically about other illicit markets, say, drug trade, money laundering and other – “where does, in terms of the capacity,” I’m reading a little bit into this question, “the capacity of the regime sustain itself, in terms of getting revenue? To what extent is oil figured into that? And there are other, sort of, shadow economy activities that are helping it do that?”
Francisco Monaldi
Sure. So, I mean, you can read this in different ways. On the one hand, if you think about the collapse of the oil revenues which are, without a doubt, the main revenue of the government of the magnitude that it has happened, you would say, I mean, this is a catastrophe, the regime will not be sustainable. On the other hand, if you think that – if you only think about an elite of, you know, of military and government officials that have to be bought with the amount of money, I mean, very few governments in Latin America have, you know, $10 billion that come to them because they own a resource. So, even in the worst scenario, if you are just thinking about a select group of cronies, you know, and military officers, that might be, you know, enough. Having said that, I think this will be an additional significant blow to the revenue that can go as low as $5 billion or less, this year, if these prices are sustained and the production decline that I believe will happen.
And then, it’s possible that oil will become not the first income because they do have, you know, drug trafficking income and they do have gold, a lot of illegal mining and also, some legal mining. But by the way, recently, there was a report published by WOLA, the Washington Office on Latin America, showing that DEA information shows that drug trafficking through Venezuela has not increased, in the last few years. It has slightly declined. So, it doesn’t seem that they have a better situation there than, you know, than the past few years, and gold mining, you have to wonder how big that could be to compensate. So, in terms of total revenue, I would say it will go down, without a doubt. It’s my – that’s my best guess. But the question, of course, is would that break up the government coalition? Or, you know, since you are sustaining the government in a few people, maybe, you know, they can sustain it.
Dr Christopher Sabatini
Okay, we’ve got a lot of questions here, and we want to stay on time, so people can get back to their Netflix viewing. So, let me go through and read all of them. So, get your pen and paper, this is going to be like a quick speed-dating exercise.
Andy Kellett asks, “What is Venezuela’s energy relationship with Bolivia, Colombia, Brazil and Peru?” The same participant also asks, “What is the state of Venezuela’s hydro capacity? Important for national electricity supply?”
Marilyn Jimenez, who actually, we follow each on Twitter, “What can be done in the short run to mitigate the effects of COVID-19?” And I think, to add to Marilyn’s question is, what is the real – very real risk of COVID-19 right now in Venezuela?
Francisco Whelan asks, “Maduro’s desperate, having already appealed to the IMF twice in one week. What are some of the rabbits he could pull out of his hat? Is it feasible for Maduro’s attempts to privatise the oil sector as a last attempt to generate cashflow? In other words, can he appeal to IMF in ways that will attract them and generate a semi-market economy?”
Carlos Bellorin says, “Hey, Francisco,” clearly you know each other, “in a post-COVID-19 world, there certainly is going to be a race to the bottom in steroids and a brutal contest for energy EMP investments. What options the regime has to compete in this scenario? What can it do to basically, ramp up its production in this race to the bottom?”
And last – actually, there’s two more. Ivan Tarkhanov asks, “Which are the potential ways in which the Venezuelan Government could attract private capital in the current climate of US sanctions?” Which was going to be my question as well, so thank you Ivan.
And then Tatiana San Miguel, “What could possibly make Russia and Chinese stop supporting Venezuela?”
Francisco Monaldi
Wow.
Dr Christopher Sabatini
Go ahead. Good luck with all those.
Francisco Monaldi
A lot of questions, and interesting question. I will start with the oil ones because I, of course, know much less about, you know, what the virus implications would be in Venezuela. But in terms of the oil sector, I mean, the regime was trying to, you know, get private investors to invest and that has started not even last years or even before. They attempted to do oil service contracts, including with some American service contractors and Chinese service contractors. Those were, you know, the sanctions really made it then hard for those contracts to work out. Then they decided that they wanted to give more a role in the joint ventures to the private partners in the existing joint ventures and create new joint ventures, and which was something that the private partners have been asking for a long while, you know, that they wanted to control their cashflow of the JB, they wanted to control the procurement, they wanted to control the operation and none of that, you know, worked properly and PDVSA was too heavily, you know, involved and with the implications of corruption, inefficiency and all that.
So, they were moving de facto, without changing the laws, and that’s one issue. Without changing the laws, they were moving in that direction very fast. The question is, is any company going to be willing to invest, under the conditions in Venezuela? Not only the sanctions, which are a very heavy burden and difficult for companies to operate there, because say you control your cashflow, but then you have to export the oil, and if you are Repsol, ENI, or Chevron, you are really worried that the US Government might decide to either sanction you or remove the licence, in the case of Chevron. So, it’s going to be very hard to attract any Western company, to put it mildly, even though they have really, really, you know, attempted to do everything they want to get them to help.
So that leaves you with Russia and China, that were mentioned in the question. You know, the Chinese have been very careful, you know. They, a while ago, stopped giving Venezuela any new fresh additional funding. They were among the first that when the US threatened secondary sanctions, stopped buying directly oil, CNPC did. They have stopped most of their investment in Venezuela, and they have said, clearly, that they will not take on any other additional project or sign any other contract, without the legal process going through the National Assembly of Venezuela, and, you know. They seemed to be very cautious on, you know, taking anything that will eventually, you know, mean that their property rights are not clear.
The Russians have been a little bit more willing to do things, and, shockingly, you know, Russia, before the take – the attempted takeover of the National Assembly by the government in January said, we want the government to take over the National Assembly, and we believe they’re going to do it, and they will change the laws to get what we want to invest in the oil sector. But that didn’t work out the way they hoped, anyways, and of course, in the middle of this crisis, the Russians are not going to, you know, do, I think, anything. But they do have some of the best real estate in the oil industry in Venezuela. They have, you know, extra-heavy oil projects, they have some of the best offshore natural gas projects. So, the Russians are potentially going to benefit from any situation in which there is a change in policies, and, you know, the oil industry can be rebuilt, even by selling their assets. Of course, that – I’m talking about Rosneft here. Of course, there are other geopolitical reasons why they want to support Maduro and, by the way, a lot of people argue that the Russians are benefitting, and I think it’s true, from the fact that Venezuelan oil production collapsed, making the effort of OPEC, you know, and plus Russia, less significant, because production, you know, of – Venezuela is out of the market.
So, it is a complex issue. I do think that, you know, that Russia and China, of course, do not – are not happy at all with the way that the US government has tried to implement regime change and for the Russians, I think there are, sort of, two conditions. One is, sort of, saving face, that it doesn’t look like, you know, the Americans won, and they were – and a friendly regime was taken out. And the second one is that their property rights are well-respected. The Chinese are, you know, much – I think much more long-term. Imagine China is the largest importer of oil in the planet. Venezuela has some of the largest oil reserves in the world. It is a perfect, sort of, marriage for the future. So, China, I think, is interested in staying in Venezuela and in developing resources in Venezuela, as long as it’s – as it is, you know, institutionally feasible. So…
Dr Christopher Sabatini
And here are the quick three questions – four questions, I think, we can close on.
Francisco Monaldi
Sure.
Dr Christopher Sabatini
And one is, Venezuela’s oil relations with Bolivia, Colombia and its – Brazil and its neighbours? The hydro capacity of Venezuela. Basically, how can it attract – how can Venezuela attract investment under US sanctions? And the last one is COVID-19. I’m sorry, but you can’t get away from that one. You’re not a public health expert, but it’s clearly on everyone’s minds, for good reasons.
Francisco Monaldi
Sure. I mean, let me start with the last one, the COVID-19. I mean, I do think that everything points out to Venezuela having a very bad situation with the – this epidemic because the – Venezuela was already having a lot of difficulty with their health services. A lot of Doctors have left the country. Their public hospitals are in horrible shape. Many of them don’t have even water or electricity all the time. So, imagine, in that context, if everyone else is worried about the capacity of ICU units and, you know, and respirators, imagine what could happen in Venezuela. It would be a horrible disaster, if this virus spreads around and I think Maduro understands that and that’s why he moved faster than most Latin American governments, to do our quarantine.
But, you know, half of Venezuela’s population is in the informal sector, and most of those – the ones that are – do not get, you know, remittances from abroad live day-to-day and so, for them it – this is a disaster, that they cannot go and continue working. On top of that, one thing that I forgot to mention before about why they’re sustaining the regime is remittances. Six million Venezuelans have left the country and, you know, remittances are about $3 billion per year, where it used to be that Venezuela had the opposite: remittances going out, you know, from immigrants, out of Venezuela. So, imagine – I mean, those jobs of Venezuelans in Colombia, in Peru, in, you know, in Ecuador, are very vulnerable during this crisis and so, the remittances will dry up, I think, significantly. So, it will be another, you know, another negative effect.
So, I think – I mean, I’m really concerned, to tell you the truth. This is going to be a catastrophe on Venezuela, a humanitarian catastrophe, and I am also unhappy to hear, you know, all the posturing from both Maduro, you know, asking a lot from the IMF, when he knows that he doesn’t have the basic conditions, or saying that it’s, you know, the fault of Guaidó, that he doesn’t get money from accounts abroad. Everybody knows that it’s not that simple and of course, there has to be some action. But I think one of the big, you know, pieces of the puzzle, is to, you know, get something – some credible, you know, government in Venezuela, in order to be executed. Who will send $5 billion to the Maduro regime, no? So, it’s a – it’s quite a dramatic situation.
In terms of the competition and the need to attract investment, I do think that under these conditions, you know, it’s almost impossible. Think about after, there is a recovery of the oil price, and some – and there is some political change in Venezuela. As Carlos Bellorin mentioned, this is going to be a very competitive environment to try to get investment in production, in exploration and production, and, you know, plenty of other markets in Latin America will be competing, and around the world, for those same dollars. And you know, we know that all oil companies are all caught in, you know, investments, because of the current situation. But also, some of them are moving out of, you know, diversifying out of oil, going into either natural gas or renewals. So, it’s going to be a very challenging environment for Venezuela to attract investment and I think, unfortunately, some Politicians in Venezuela seem to believe that because Venezuela has the resources, you know, the money’s going to flow. And I don’t think that’s going to be the case if, you know, if there are no – the conditions are not met, which are a few, and not that easy to get done.
The easiest part is to change the law, you know, which, of course, requires some political consensus. But changing the law and changing the fiscal regime and – but it’s more – be much harder to have, you know, the political stability and the other macro – the macro-economic conditions, etc., for this to be an attractive proposition. And there is no doubt that without private investment, you will not recover the Venezuelan oil sector.
Dr Christopher Sabatini
Fantastic. Well, we’re out of time. I want to thank all of you for participating. I want to thank Francisco for agreeing to do this. As I say, we would have done this in this way, this format, either way. But it worked out very well, in this particular case. Stay tuned for more, everyone.
First of all, Francisco has a very good report on the Baker Institute’s website, I believe it is, sort of the institutional conditions, and sort of testing theories of natural resource extraction and pricing and predictability. And in the case of Venezuela, it’s an excellent report full of – chock-full of details and very good research and theory testing.
The second is that we will – tomorrow at 1 o’clock Chatham House will be hosting a webinar on COVID-19 in Latin America, with Jude Webber from the FT, the FT’s Correspondent in Mexico and Michael Stott, the FT Representative – the FT Latin America Editor. Both of them will be talking about the different policy responses across the hemisphere and the implications of COVID-19 for immigration and immigration policy. So, if you’re interested in those, please tune in tomorrow.
So, thank you very much, Francisco. I appreciate it. I’m sure there’s a lot more to discuss and please join me in thanking – although he can’t hear the applause, but I’m sure everyone’s applauding in their own way. So, thank you very much, and good luck, and it’s a very depressing and sad situation. I hope everyone is staying safe, also, in their own environment. So, thank you, Francisco.
Francisco Monaldi
Thanks, Chris.
Dr Christopher Sabatini
Bye, bye.
Francisco Monaldi
Bye.
