Q&A with Tissot Associate’s Roger Tissot

Instant Max AI

(Energy Analytics Institute, Pietro D. Pitts, 19.Jul.2013) – Tissot Associates Consultant Roger Tissot spoke with Energy Analytics Institute in a brief interview from Canada.

What follows are excerpts from the brief interview.

Regarding the decision of Ecuador’s government to develop the ITT fields:

EAI: Ecuador has decided to move forward with development of the ITT fields: how do you view the decision?

Tissot: I am not surprised by President Rafael Correa’s decision of to drill the ITT Fields in the Yasuni National Park and for three reasons:

  1. Credibility: Ecuador’s international reputation is not that good do to contradictions made by Correa in regard to not honoring oil contracts.
  2. Timing: The recession in Europe came at a bad time for the ITT initiative as many of these countries no longer have the ability to make investments. The US’ green policies favored Ecuador but the biggest problem here has to do with the relationship Ecuador has with the U.S. which is not great.
  3. Need: The need for dollar revenues/income was not been met as Correa originally planned, thus necessitating a change of policy by the government.

As such, in terms of problems with Ecuador’s plan to increase revenues and Exploit ITT fields, we need to consider the following: 1. How will the fields be developed? 2. Social challenges and/or protests to come from indigenous communities? 3. Will the government try to attract investors via bidding rounds or will it engage in direction negotiations with potential partners?

I think bidding rounds would be the best way to develop the ITT fields but what would the production plans entail?

EAI: Would Chinese companies make a good fit in Ecuador in terms of partnering with the government?

Tissot: Chinese companies would be logical partners for development of the ITT fields as well as other projects.

Regarding Petrocaribe and rumors that Venezuela is looking to increase interest rates under the initiative:

EAI: Should the member countries be surprised if Venezuela decides to increase interest rates?

Tissot: None of the Petrocaribe countries should be surprised by the Venezuelan government’s decision or potential decision to tighten the terms related to the initiative due to the excess spending by the Venezuelan government under late President Hugo Chavez that was obvious to everyone.

Frankly, many of the Petrocaribe countries are addicted to cheap Venezuelan oil which their governments could sell on the spot market to assist them raise revenues that could be used to assist them to cover other expenses.

In my view, Venezuela is facing a very bad fiscal situation and a not so good economic situation. President Nicolas Maduro does not have the ability or support to implement policies needed to address fiscal imbalances in Venezuela.

EAI: Is Petrocarible a good initiative and will it endure?

Tissot: Petrocaribe was a good social-economic tool for Chavez. I believe it will endure under Maduro as he tries to maintain “the legacy of Chavez” in the region.

Simply put, there are not many options for the Petrocaribe countries and they will most likely have to revert to their old ways of obtaining oil and derivatives, before the birth of Petrocaribe.

On the other hand, I do not see many companies willing to send oil and derivatives to the Caribbean or pick up the void that could be potentially left my PDVSA.

In my opinion, Petrocaribe is like giving foreign aid to a poor country to help them reduce debt and poverty levels. In other words, Petrocaribe was like a type of foreign aid with an ideological slant.

Editor’s Note:

The Petrocaribe initiative, the brain child of late Venezuelan President Hugo Chavez, was inspired by independence and sovereignty of peoples in an attempt to alleviate the hegemonic influence of the U.S. in Latin America and the Caribbean.

Measures by Venezuela to potentially increase interest rates under Petrocaribe, coupled with the recent 32% devaluation of the Bolivar, the Venezuelan currency, hints that the government is facing mounting economic and financial problems.

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