A boy jumps near the “Los Petroleros” sculpture that shows two men working on an oil drill of Petroleos de Venezuela, S.A, PDVSA, on the Sabana Grande boulevard, in Caracas, Venezuela, March 20, 2023. Venezuela’s oil czar, Tareck El Aissami announced his resignation on Twitter and pledged to help investigate any allegations involving PDVSA. (AP Photo/Ariana Cubillos)
By Regina Garcia Cano in Caracas
CARACAS, Venezuela (AP) — The man responsible for running Venezuela’s oil industry — the one that pays for virtually everything in the troubled country, from subsidized food to ridiculously cheap gas — has quit amid investigations into alleged corruption among officials in various parts of the government.
Tareck El Aissami’s announcement Monday was shocking on multiple counts. He was seen as a loyal ruling party member and considered a key figure in the government’s efforts to evade punishing international economic sanctions.
And he led the state oil company PDVSA in a Venezuelan business sector widely considered to be corrupt — in a country where embezzelment, bribery, money laundering and other wrongdoing are a lifestyle.
“Obviously, they are giving it the patina of an anti-corruption probe,” said Ryan Berg, director of the Americas program at the Center for Strategic and International Studies, a Washington-based think tank.
“Rule of law is not being advanced here,” Berg added. “This is really a chance for the regime to sideline someone that it felt for some reason was a danger to it in the moment and to continue perpetuating acts of corruption once particular individuals have been forced out of the political scene.”
Hours after El Aissami revealed his resignation on Twitter, President Nicolás Maduro called his government’s fight against corruption “bitter” and “painful.” He said he accepted the resignation “to facilitate all the investigations that should result in the establishment of the truth, the punishment of the culprits, and justice in all these cases.”
Venezuela’s National Anti-Corruption Police last week announced an investigation into unidentified public officials in the oil industry, the justice system and some local governments. Attorney General Tarek William Saab in a radio interview Monday said that at least a half dozen officials, including people affiliated with PDVSA, had been arrested, and he expected more to be detained.
Among those arrested is Joselit Ramirez, a cryptocurrency regulator who was indicted in the U.S. along with El Aissami on money laundering charges in 2020.
Corruption has long been rampant in Venezuela, which sits atop the world’s largest petroleum reserves. But officials are rarely held accountable — a major irritant to citizens, the majority of whom live on $1.90 a day, the international benchmark of extreme poverty.
“I assure you, even more so at this moment, when the country calls not only for justice but also for the strengthening of the institutions, we will apply the full weight of the law against these individuals,” Saab said.
Oil is Venezuela’s most important industry. A windfall of hundreds of billions in oil dollars thanks to record-high global prices allowed the late President Hugo Chávez to launch numerous initiatives, including state-run food markets, new public housing, free health clinics and education programs.
But a subsequent drop in prices and government mismanagement, first under Chávez’s government and then Maduro’s, ended the lavish spending. And so began a complex crisis that has pushed millions into poverty and driven more than 7 million Venezuela to migrate.
PDVSA’s mismanagement, and more recently economic sanctions imposed by the U.S., caused a steady production decline, going from the 3.5 million barrels a day when Chávez rose to power in 1999 to roughly 700,000 barrels a day last year.
David Smilde, a Tulane University professor who has conducted extensive research on Venezuela, said the moves by Maduro’s government are more than just an effort to clean its image.
“Arresting important figures and accepting the resignation of one of the most powerful ministers in a case that involves $3 billion does not improve your image,” he said. “It is probably because the missing money actually has an important impact on a government with serious budgetary problems.”
The Biden administration recently loosened some sanctions, even allowing oil giant Chevron for the first time in more than three years to resume production. Maduro’s government has been negotiating with its U.S.-backed political opponents primarily to get the sanctions lifted.
U.S. congressional researchers saw El Aissami as an impediment to Maduro’s goals.
“Should Al Aissami remain in that position, it could complicate efforts to lift oil sanctions,” a November report from the Congressional Research Center said.
The U.S. government designated El Aissami, a powerful Maduro ally, as a narcotics kingpin in 2017 in connection with activities in his previous positions as interior minister and a state governor. The Treasury Department alleged that “he oversaw or partially owned narcotics shipments of over 1,000 kilograms from Venezuela on multiple occasions, including those with the final destinations of Mexico and the United States.”
Under the government of Chávez, El Aissami headed the Ministry of Internal Affairs. He was appointed minister of oil in April 2020.
“El Aissami was a key player in the Maduro government’s sanctions evasion strategy. We’re talking about someone who knows where all the bodies are buried, so it will be key to watch where he ends up,” said Geoff Ramsey, a senior fellow at the Atlantic Council focused on Colombia and Venezuela. “If El Aissami ends up being implicated himself, it could have serious implications for the entire power structure.”
In September, Maduro’s government renewed wrongdoing accusations against another former oil minister, Rafael Ramírez, alleging he was involved in a multibillion-dollar embezzlement operation during the early 2010s that took advantage of a dual currency exchange system. Ramírez, who oversaw the OPEC nation’s oil industry for a decade, denied the accusations.
In 2016, Venezuela’s then opposition-led National Assembly said $11 billion went missing at PDVSA in the 2004-2014 period when Ramirez was in charge of the company. In 2015, the U.S. Treasury Department accused a bank in Andorra of laundering some $2 billion stolen from PDVSA.
Top warming talks official hopes for ‘course correction’ and praises small steps in climate efforts
Adnan Amin, CEO and number two official at the upcoming Conference of Parties (COP28) in Dubai, answers questions during an interview, Monday, Sept. 18, 2023, at United Nations Headquarters. Amin said he knows what activists, critics and the head of the United Nations really want – a phase out of fossil fuels that cause climate change. He said it looks unlikely. (AP Photo/Joseph Frederick)
By Seth Borenstein in New York
NEW YORK (AP) — A top official helping to oversee upcoming international climate negotiations hopes to prove critics wrong — and surprise them with a “course correction” for an ever-warming world.
But don’t expect that big a turn.
Adnan Amin, the CEO and No. 2 official at the upcoming Conference of Parties (COP28) in Dubai in late November and December, said he also knows what activists, critics and the head of the United Nations really want — a phase-out of fossil fuels that cause climate change. He said it looks unlikely.
Yet Amin said that while an agreement ridding the world of fossil fuels doesn’t look likely, a “phase-down of fossil fuels is inevitable.”
In an interview with The Associated Press, Amin demonstrated how the leadership of the climate talks is trying to thread a moving diplomatic needle and praised steps in a decarbonizing direction, however small. Amin’s boss, the COP28 president, is an oil executive; Amin was the founding director of the U.N.’s renewable energy agency. The talks are being hosted by petrostate United Arab Emirates.
The Kenya-born Amin is quick to defend COP28 President Sultan al-Jaber, pointing out that al-Jaber also runs a renewable energy company and was key in the founding of the U.N.’s renewable energy agency in the UAE. He will surprise critics, Amin said.
In 10 years when critics and others look back at the talks, Amin wants to hear amazement.
“I hope they will be saying that ‘we didn’t think that an oil producing country could achieve an outcome on climate of this sort. We didn’t think that a process that we thought was blah blah ( the words activist Greta Thunberg used to describe climate negotiations ) could achieve an outcome of this sort’,” Amin said. “But that was a course correction that the world needed to get us to a place of comfort for all of us.”
AN ELABORATE ECOSYSTEM IS IN THE WAY
It all comes down to the role of coal, oil and natural gas, the nations that rely on them and the companies that profit from them.
Amin welcomes fossil-fuel interests to negotiations, while U.N. Secretary-General Antonio Guterres, activists and some scientists literally want them gone. They say a phase-out of fossil fuels is the only way to curb warming to a manageable level.
But given oppositions by some countries and the climate talks requirement to act by consensus – so one nation can stop everything – it’s unlikely that a phase-out will be approved, Amin said. He pointed to the desire by some African countries to use fossil fuels to develop. Rich nations already emitted heat-trapping gases to develop, he said, and it’s not fair to ask Africa to forego that without massive financial aid to help them leapfrog to clean energy.
Outside experts don’t buy that argument.
“We don’t need these historic polluters using Africa poverty to promote fossil fuels which will ultimately inhibit Africa’s development,” said longtime climate analyst Mohamed Adow, director of Power Shift Africa.
Africa, which produces less than 4% of the world’s carbon emissions, gets hard hit with extreme weather, such as the rainy storm that triggered Libya’s floods and intense droughts, and have fewer resources to cope with disasters.
“If we truly want to be able to tackle climate change, the first thing we need to do is phase out fossil fuels,” Adow said in an email. “We don’t want UAE to hide behind low expectations of itself because it is an oil country. If it couldn’t deliver a radical, decarbonizing COP28 summit it should not be volunteering to coordinate it.”
THE DIFFERENCE BETWEEN ‘PHASE OUT’ AND ‘PHASE DOWN’
Climate scientists Niklas Hohne at the New Climate Institute and Bill Hare at Climate Analytics say there’s a significant difference between “phase out” and “phase down.” They say “phase down” is what the fossil-fuel industry wants, not what the world needs.
“The scale of investment in fossil fuel development by the UAE is the clearest indication of the direction of travel and it is not towards decarbonization but locking in massive fossil gas infrastructure,” Hare said.
While a phase-out is crucial, former U.S. State Department climate lawyer Nigel Purvis said Amin is probably right that ending to fossil fuel is likely an impossible ask. That’s because it seemed as if major nations like Russia, China and Saudi Arabia were blocking such a move at a recent meeting of rich economies, he said.
Amin said upcoming climate talks aim to be the most inclusive ever, but that also includes the at-times vilified fossil fuel industry.
“We believe that the oil and gas industry needs to be part of the climate equation,” Amin said. “We’re engaging with them to see if we can get them to commit to, you know, more rapid decarbonization of their operations.”
Amin said he understands the angst and anger of young people. It’s their future, he says, so they will have more of an official role in this year’s negotiations than in the past.
Amin said he will consider the upcoming talks a success if they accomplish four things: fix and increase climate financial aid from rich nations to poor; decarbonize energy systems more; increase funding for nations to adapt to a warming world, especially hunger and health problems; and include more groups in the negotiations.
Fixing climate change is painstakingly slow, he said, but agreements from 2015 and 1997 have produced progress.
“There is a lot of impatience given the scale of the crisis,” Amin said. “The multilateral system moves slowly, but it moves.”
Growing number of forecasts predict oil will reach US$100 this fall
Pumpjacks draw out oil and gas from wellheads near Calgary on Friday, April 28, 2023. A growing number of forecasts are calling for the return of US$100 oil before the end of the year. THE CANADIAN PRESS/Jeff McIntosh
By Amanda Stephenson in Calgary
A growing number of forecasts are calling for the return of US$100 oil before the end of the year — a prospect that could put even more pressure on consumers and make it harder for central bankers to rein in inflation.
North American benchmark crude West Texas Intermediate has surged 30 per cent since June 1 and is hovering this week around US$90 per barrel, its highest point since November of last year. Global benchmark Brent crude was trading higher than US$93 on Wednesday.
In recent days, a number of analysts have revised their forecasts with the view that triple-digit oil prices may now be in the cards for this fall. Bank of America, Citigroup and Goldman Sachs are now all predicting US$100 Brent crude prices before 2024, as is Chevron CEO Mike Wirth, according to a Bloomberg report.
“We’re chewing on this right now,” said Andrew Botterill of Deloitte Canada, in an interview Wednesday in Calgary, where hundreds of oil and gas executives from around the globe are gathered this week for the 24th World Petroleum Congress.
Botterill said he’s currently working on Deloitte’s upcoming oil price forecast report and considering whether to revise his own earlier projections higher.
“I can absolutely see it ($100 oil) … I absolutely think we will have moments,” Botterill said.
“I can list a lot more reasons why oil will move up right now than down.”
Last week, the International Energy Agency predicted that world oil demand is forecast to grow to 101.8 million barrels per day by the end of this year, driven by resurgent Chinese demand.
In addition, Saudi Arabia and Russia recently agreed to extend their voluntary oil production cuts through the end of this year, leading to what the IEA calls a “substantial market deficit.”
“We have very firm global demand right now,” Botterill said.
“And as we get into the winter, that’s always a big consumption season as you start to see heating demand … So that really has us looking at how much we might see that (price) strengthening.”
Surging oil prices in the months ahead will likely make efforts by the Bank of Canada and other central bankers to get inflation under control more challenging.
According to Statistics Canada, Canada’s annual inflation rate has risen for two consecutive months, with higher gasoline and energy prices the major driving factor.
Fuel price tracking website GasBuddy.com says the average gasoline prices in Canada Wednesday was $1.67 per litre, nearly 15 cents higher than the 2022 average.
“Energy costs play a big role in all of our lives, and they’re certainly a big part of the inflation calculation for Canada,” Botterill said.
“With these firm prices, will we see that soften some of the demand? Will you and I turn our thermostat down, drive a little less? I hope so, but it’s the big (global) demand picture that’s really continuing to grow.”
However, Canadian energy companies are well-positioned to benefit from higher prices, said Lisa Baiton, president of the Canadian Association of Petroleum Producers on Thursday.
“The outlook is really bullish, for the foreseeable future,” she said. “You’re seeing a lot of activity, some M&A and consolidation. Companies are well-capitalized, and they’re willing to put their capital at play.”
Many Canadian oil and gas companies reaped record profits in 2022 due to the post-Ukraine invasion oil price spike. They were also criticized by environmentalists for directing the bulk of those profits into returns for shareholders, rather than investing in major emissions reduction projects.
But Baiton said Canadian companies are at a disadvantage to their American counterparts, who have access to an aggressive suite of government financial incentives for the deployment of technologies such as carbon capture and storage.
“Our members are ready to deploy capital into next-gen decarbonization projects. But again, capital is mobile – it will go to where there’s the greatest rate of return,” she said.
Keith Stewart of Greenpeace Canada said whether or not energy companies choose to invest in decarbonization projects, $100 oil may actually speed up the global energy transition.
“High oil prices are a double-edged sword for the oil industry, because while they mean big profits today, they also make alternatives like energy efficiency, electric vehicles and heat pumps much more attractive,” Stewart said.
In a research note, Eight Capital analyst Phil Skolnick said for the full year 2024, he continues to forecast an average WTI price of US$86 per barrel and an average Brent price of US$90.
But he is also bullish on oil prices for this fall, pointing out that OPEC’s global demand forecast for 2023 is a record 103 to 104 million barrels per day — even higher than the IEA’s forecast.
“If OPEC’s prediction turns out to be correct, the Q4/23 supply deficit may be the biggest in more than a decade,” Skolnick wrote.
This report by The Canadian Press was first published Sept. 20, 2023.
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