Venezuelan president Nicolas Maduro may or may not be a popular or effective president, depending on whom you are listening to. Yes, he has presided over a calamitous hyperinflation that is driving a constant stream of refugees out of his country. Just last month, the country registered 200,000% inflation, which is predicted to rise to one million percent soon. The knee-jerk reaction in US officialdom and the Western media is that Maduro is a bad president who can’t handle economic affairs and/or is corrupt, and reports from disgruntled citizens in Venezuela suggest to the Neocons that it is time to go in guns blazing and take out this miserable wretch.
But there are a few facts that must be considered before you make up your mind about Maduro and the situation in Venezuela.
Like him or not, Maduro has many strikes against him that are not his fault.
Topping the list is the fact that, while the country is generally recognized as having the richest oil reserves in the world, the crude is so viscous that it not only gunks up extraction equipment but also cannot be pumped as-is from the Orinoco Belt to the Port of Jose Terminal. It must first be pre-treated, for example, by dilution to a sufficient thinness for pumping, and the diluent used (naphtha) is not cheap and not easy to acquire. The US has weighed banning naphtha exports to Venezuela as a way of ensuring that the population will continue their suffering to the benefit of making America great again. But there are other solutions as well.
Asphaltenes are the main cause of equipment and pipeline clogging with heavy crudes. Use of asphaltene inhibitors to prevent precipitation of asphaltenes is generally seen as the best solution. Dispersants are another option, but go to work too late, after the pipes are already gunked up. The preferred strategy is to prevent these asphaltenes from precipitating, ie, holding them in solution during processing and transport. Patents, such as this one, have been issued relating to this problem.
The second item on the list is that, even though China and Russia are willing to develop the infrastructure needed to solve these problems, oil prices had scarcely been high enough to sustain such development.
Maduro also faces crushing debt, crumbling infrastructure, worker unrest, hyperinflation and US sanctions.
But now, even as the bottom is falling out, there have been big stirrings, particularly Maduro’s visit to China Sept 13-16. The nation’s Telesur reported that 28 deals had been closed, including a big loan from China on top of its past loans that have helped keep the country (barely) afloat.
Of course, Spanish news agency EFE reports that some of these “deals” – including the development of hydrocarbon ventures Petrourica and Petrozumano – were just memoranda of understanding (MoU), which are by definition non-binding and may or may not materialize.
But the implementation of these agreements is crucial to Venezuela and to China as well if it is to maintain ties with Venezuela and keep it within its sphere of influence.
And then there is Chinese partner Russia, which also has an interest in seeing Venezuela succeed. Russia is investing heavily in Venezuelan oil and is also building a Kalashnikov arms plant in Venezuela, to boost both the economy and the military.
Naturally, if you are reading US reports, you will find some that are nothing but smears, stating that Russia is just trying to assert its influence and create chaos. A really odd assertion from a country that has sown chaos and destruction throughout the world.
End 2015-start 2016 the oil price bottomed out, reaching less than 30%. However, in 2018 the price went from about $60 to about $70 and the trend is upward. It is likely that China and Russia will be very interested in cooperating with Venezuela now.