First Oil

In Venezuela and Mexico, those elections will be on May 20 and July 1, respectively. The outlook in both countries is not good.

Venezuela. In what may be an all-time sham election, President Nicholas Maduro faces voters for a second time after being elected in April 2013 to succeed the late, former President, Hugo Chavez. Maduro has carried on Chavez’s legacy for five years with unbridled corruption. He should be a shoe-in, as Maduro ensured that his only opponent is a former “Chavista” named Henri Falcón. Yet, as one commentator at conservative e-zine, American Thinker, noted so brilliantly, “Maduro rigged his country's election, and is now terrified it's not rigged enough.”

During Maduro’s tenure, Venezuelan oil production has gone from 3.0 MMbpd in 2013 to a mere 1.9 MMbpd during 2017. And April output plummeted to 1.5 MMbpd. It’s no surprise, given that maintenance of fields has been minimal. And it hasn’t helped that Maduro, over the last year, has arrested 65 PDVSA officials and managers, plus the former oil minister, for alleged corruption. That’s pretty rich, considering that Maduro is the ultimate source of the corruption. We’ve heard rumors in Houston recently that Venezuelan officials are talking to U.S. and European operators about keeping or bringing back a presence in the country, to help rebuild oil production. Yet, on April 16, two Chevron employees were arrested by Maduro’s thugs for potential “treason.” That’s a hell of a way to encourage operators to stay in Venezuela.

Mexico. Most of the upstream industry seems to think that Mexico’s four-year-old “opening” of its E&P sector is going fairly well, despite some bureaucratic failings. Indeed, at an Offshore Technology Conference (OTC) topical breakfast on May 3, a Pemex official outlined the various plans and initiatives that the firm has for encouraging further participation by foreign operators and building back oil production. Yet, the unmentioned big elephant in the room was the fact that opposition leftist candidate Andres Manuel Lopez Obrador is likely to win Mexico’s July 1 presidential election. As of May 3, a poll showed that he held 39% of voters, with two other principal candidates pulling just 25% and 14%.

If Lopez Obrador wins, he has pledged to review more than 90 contracts signed since the opening, and maybe scuttle any or all of them. That won't help Mexico’s oil output, which has gone from 3.10 MMbpd in 2007 to 1.96 MMbpd in 2017.

Observations from OTC. You wouldn’t know from visiting the 50th OTC in Houston early this month that the offshore industry is still depressed. An air of optimism pervaded the OTC show floor. Most people felt that the offshore sector is transitioning toward a good 2019.

Plenty of technological innovation was on display, as so often happens when the industry is pulling out of an activity trough. And circulating among many of the technologies displayed was the theme of digital transformation—its presence cannot be overstated.

This being the 50th OTC, several commemorative sessions took place, including a special look at OTC’s history on the first day. Among that session’s four speakers was our company’s retired Chairman, President and Editorial Director, Bob Scott, who was also editor of World Oil from 1967 into 1984. Bob presented an intriguing, humorous look at a number of characters and funny moments that have graced OTC over the years.

Ironically, preliminary figures show that attendance was down this year, at 61,300. This compares to 64,765 in 2017; 68,054 in 2016; 94,880 in 2015; and the record 108,300 of 2014.

Last but not least, our parent firm, Gulf Publishing Company, has changed its name after 102 years. Please see the full announcement and explanation on page 7. 

About the Authors

Kurt Abraham

World Oil

Kurt Abraham kurt.abraham@worldoil.com