Tuesday, February 21, 2006

The Trans-Amazonian Gas Line:Project or Deal? By Gustavo Coronel In the “old” and much maligned PDVSA a project like the Trans Amazonia pipeline would require feasibility studies, its public discussion and its approval by Congress. In this autocracy, Chavez has already committed to it, Venezuela is apparently the only country that has money to finance it and it appears to be unprofitable, unnecessary and an environmental threat. But Chavez wants it, so much for PDVSA belongs to everyone. From what is understood, the project will ship between 3 and 4 billion cubic feet of gas per day. Venezuelan gas reserves are 15 trillion cubic feet of free gas (150 trillion cft. total), thus it looks extremely  iffy to spend so much money on a project with such a short life. Moreover, these markets have controlled process which are much lower than what would be required to build and make the pipeline profitable. But let’s have Gustavo tell us his take: The Trans-Amazonian Gas Line:Project or Deal? By Gustavo Coronel The gas line proposed by Hugo Chavez to carry Venezuelan gas to Argentina across the Amazon basin will face four main problems: (1), there are no gas reserves in Venezuela that can sustain the delivery of this product for the number of years, 20 or more, that would be required to justify the construction of the line; (2), there are no likely sources of financing for the US$25 billion or more required to build the line, except Venezuela. Brazil and Argentina will be very reluctant to supply their share of the money; (3) the environmental impact of the line is potentially so disastrous that environmentalists will vigorously resist its construction; (4), the delivery price of the gas will have to be so high, between $110 and $130 per barrel of oil equivalent, that clients will refuse to accept it, unless heavily subsidized. There are other, smaller, problems involved such as the Venezuelan popular reaction against a project that would drain much of the financial resources required to solve the urgent demands for housing, infrastructure, education and health in the country. Apart from these "small" problems the gas line proposed by Chávez is reported to be the object of great interest in certain circles. Mr. Jorge Luis Sanchez, representative of Venezuelan state agency Enagas, recently announced (La Verdad, Maracaibo, 02-15-2006), that government representatives from Brazil, Argentina and Venezuela would meet in Rio in order to analyze the project and that "Brazil would like to accelerate the construction of the line." Sanchez added that in March they could announce the initiation of the project. In a related information (AFP, Moscow, February 15, 2006) Vladislav Tsygankov, representative of Russian company Gazprom is reported to have met with executives from the Venezuelan state owned petroleum company, PDVSA, to examine the possibilities of cooperation in the construction of this line that would cost "some US$20 billion and take 5-7 years to construct." In parallel, additional information (The Daily Journal, Caracas, February 18, 2006) coming from Petrobas, the Brazilian petroleum company, indicates that the extension of the line would be 6,200 miles, a figure that seems far too precise if one considers that no feasibility studies have yet been made. The Gas and Energy Director of the company, Mr. Ildo Sauer, added that the volumes to be transported would be the equivalent of one million barrels of oil per day, a volume that, translated into gas terms would represent almost half of the current Venezuelan gas production, an obvious impossibility. Mr. Sauer also says that such a line would save Brazil US$11 billion per year, due to the "lower costs" of the Venezuelan gas (?). The report mentions US$40 billion as a possible cost for the line, estimate which suggests that no one really knows what this line would cost. Hugo Chávez has said that the financing will come from his government and the other Latin American governments involved in the project, as well as "other nontraditional sources." One of this nontraditional sources could be Gazprom, says from Moscow Mr. Denis Ignatyev, a spokesperson for the company. Mr. Sauer, from Petrobras, also believes that the construction of the line will generate 520,000 jobs in Brazil. It would be very interesting to know how he arrived to this estimate, since the construction of a pipeline is not particularly labor intensive. Most equipment would be built abroad, engineering studies take little manpower and the actual laying of the line would involve a few thousand people. Although I do not doubt the good intentions of the technical and managerial staff engaged in the early conceptual stages of the project, my concern is that, thanks to crooked and irresponsible politicians, the idea of a trans-Amazonian gas line will be imposed on our peoples, an idea which is looking less and less like a feasible project and more and more like a "deal." Latin American hyper-corruption has been largely fueled by projects which are not a priority for the countries, not economically justifiable, not rewarding for the peoples of the region but very good for some companies, lawyers, politicians, brokers and other members of the fauna that has grown very rich in the region, while the population stays largely ignorant, hungry and sick. Many of the large projects attempted or actually built in Latin America during the last 50 years belong into this category. There is an anecdote in Venezuela that illustrates this mechanism: a major outbreak of food poisoning takes place in Caracas. They trace the problem to several restaurants having served rotten fish. They identify the captain of the boat who sold this fish who, under interrogation, exclaims: "You mean the restaurants actually served the fish? How stupid of them! This fish was not meant for eating. It was meant for deals!" Well, I smell rotten fish in connection with this gas line. Imagine the amount of money and dealings involved in the acquisition of 500,000 pieces of pipe, about a hundred compressor stations, thousands of kilometers of road building and the drilling of hundreds of new gas wells, in a hurried and unprofessional effort to increase Venezuelan non-associated gas production. Most of the contracting will be done directly, without bidding, as it has become the custom in the Chávez government. Much will be given to friendly companies and individuals, who will, in turn, sub-contract acquisitions and services, after pocketing a healthy portion of the money. There will be billions of dollars running around in a relatively closed and small circuit of people and organizations. One of the most frustrating aspects of my experience as an specialist in the Inter-American Development Bank, during the 1980's, was to witness how much of the money dedicated by the Bank to development projects ended up in the hands of greedy politicians and corrupt business people. There was a corrupt system in place, one that could not be uprooted by the dismissal of one or more individuals. As it happens in the world of terrorists (did you see the movie Munich?), when one is eliminated another one takes his, her place. The solution is to minimize the incentives for the system to continue operating. In the case of the gas line proposed by Chávez, the solution is to combat this pretension now, while there is time. I am writing to Transparency International in this regard since I believe they can apply the required pressures to keep international public opinion alert in connection with this "project." 8:06:13 PM    comment []

Chavez moves Venezuela's wealth abroad by Kenneth Rijock Ken Rijock from complinet treats us to more charges on the financial shenaginans of the Chavez robolution as reported by vcrisis. These are serious charegs indeed, but billions are already missing and nothing is done. CHAVEZ MOVES VENEZUELA’S WEALTH OFFSHORE by Kenneth Rijock The Venezuelan government is engaged in a massive money laundering operation, the object of which is obvious: to set up a pipeline with which to transfer’s Venezuela’s billions of dollars of oil profits overseas for Chavez and corrupt members of the “Bolivarian Elite.” Chavez has a good model for thie endeavor; Cuba’s Fidel Castro and senior Cuban officials are reputed to have millions of dollars in accounts in Panama, Brazil, Canada, the United Kingdom and other countries. Castro himself is believed to be a billionaire. While all the details remain unknown, the facts to date demonstrate a concerted effort to establish a secret financial structure to hold funds looted from PDVSA receipts, and the national treasury. What is known so far: + Ricardo Fernandez Barrueco, a known front for the Chavez family, has opened dozens of offshore accounts in the tax havens of the world, both in the Caribbean and in Europe. His business organization, the Proarepa Group, is in truth and in fact owned by Chavez and his immediate family. + The Swiss private bank, Vontobel, which operates an unlicensed facility in Caracas, has seen senior Venezuelan military officers depositing large sums lately. When contacted by a prospective depositor using Fernandez Barrueco as a reference, the bank manager advised that Fernandez was a valued customer. Curiously enough, the bank does not list Venezuela as one of its branch locations. Vontobel is the designated recipient for “commissions” diverted from lawful Venezuelan commerce by the Bolivarian elite for their own use. + Miami-based expatriate Venezuelan financial planners are actively seeking to purchase a Swiss bank for Chavez. These individuals have close personal ties to the Swiss banking industry. + There is an unconfirmed report that Chavez has already bought a bank in Lebanon. Whether this is further evidence of a relationship between the Chavez regime and Hezbollah, a designated terrorist organization, remains for further proof, but cash flows from Venezuela into Hezbollah’s accounts in the Middle East. This cannot be occurring without governmental knowledge. + The Chavez government has recruited former intelligence agents experienced in covert financial operations to assist in meeting its economic goals. These individuals, from Cuba, the US, the UK, Spain and Latin America, have sufficient skills to achieve the desired goals. As additional information surfaces on the money laundering operation, it shall be analyzed and circulated. 7:38:04 PM    comment []