You might consider attending Harvard to learn from Francisco Monaldi. You could hire Daniel Kerner from Eurasia Group for a hefty fee. Or you might spend months waiting for a meeting with Ali Moshiri from Chevron. Alternatively, you can just head to YouTube and watch them candidly discuss the overarching themes of oil and gas in Argentina and Venezuela. For free, while you’re brushing your teeth.
As is often the case, humanity is falling short. This insightful master class from three industry leaders has garnered a mere 206 views.
Here are some key takeaways. I have more notes, but those are just for me. You should really watch this one on your own.
Daniel Kerner, Eurasia Group:
– We’re witnessing increased “pragmatism” due to government ownership of YPF shares. (State interests are aligning with oil companies.)
– Anticipate cycles between state control leading to declining production, followed by private autonomy amidst growing resentment towards oil profits, and so forth.
Francisco Monaldi (Harvard, IESA, Baker Center):
– Shale oil could be less vulnerable to expropriation than conventional oil, as it requires consistent investment. This resistance to the resource-nationalist inclination to seize oil without acknowledging the costs of sustaining it is noteworthy. (Later mentions that offshore exploration at the Malvinas is similarly too costly and risky for a government.)
– Venezuela is “opening up to the oil sector.”
– To align the current budget with the current fiscal take, Venezuela needs oil prices at $200 per barrel.
Ali Moshiri, Chevron Corp:
– VENEZUELA: The primary risk isn’t investment; “it’s the efficiency & effectiveness of execution.” He would willingly invest $20 billion in a new Orinoco Belt project, yet implementation remains challenging. The country struggles with a lack of human resources, skills, and “capacity.” Furthermore, the supply chain is fragmented, though expropriation risk is lower compared to other nations.
– ARGENTINA: A completely different scenario. Chevron markets oil domestically in Argentina at $75 to $80 per barrel. YPF is “one of the best companies to collaborate with.” Argentina boasts “tremendous human resources capacity.” “Everything is in place.” The only challenge is the “energy deficit.” (He becomes less precise and more diplomatic.) YPF is performing better than ever. Chevron is investing $1 billion annually in Argentina.