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Venezuela oil czar in surprise resignation amid graft probes

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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.

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Energy

What does a Trump presidency means for Canadian energy?

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From Resource Works

Heather-Exner Pirot of the Business Council of Canada and the Macdonald-Laurier Institute spoke with Resource Works about the transition to Donald Trump’s energy policy, hopes for Keystone XL’s revival, EVs, and more. 

Do you think it is accurate to say that Trump’s energy policy will be the complete opposite of Joe Biden’s? Or will it be more nuanced than that?

It’s more nuanced than that. US oil and gas production did grow under Biden, as it did under Obama. It’s actually at record levels right now. The US is producing the most oil and gas per day that any nation has ever produced in the history of the world.

That said, the federal government in the US has imposed relatively little control over production. In the absence of restrictive emissions and climate policies that we have in Canada, most of the oil production decisions have been made based on market forces. With prices where they’re at currently, there’s not a lot of shareholder appetite to grow that significantly.

The few areas you can expect change: leasing more federal lands and off shore areas for oil and gas development; rescinding the pause in LNG export permits; eliminating the new methane fee; and removing Biden’s ambitious vehicle fuel efficiency standards, which would subsequently maintain gas demand.

I would say on nuclear energy, there won’t be a reversal, as that file has earned bipartisan support. If anything, a Trump Admin would push regulators to approve SMRs models and projects faster. They want more of all kinds of energy.

Is Keystone XL a dead letter, or is there enough planning and infrastructure still in-place to restart that project?

I haven’t heard any appetite in the private sector to restart that in the short term. I know Alberta is pushing it. I do think it makes sense for North American energy security – energy dominance, as the Trump Admin calls – and I believe there is a market for more Canadian oil in the USA; it makes economic sense. But it’s still looked at as too politically risky for investors.

To have it move forward I think you would need some government support to derisk it. A TMX model, even. And clear evidence of social license and bipartisan support so it can survive the next election on both sides of the border.

Frankly, Northern Gateway is the better project for Canada to restart, under a Conservative government.

Keystone XL was cancelled by Biden prior to the invasion of Ukraine in 2022. Do you think that the reshoring/friendshoring of the energy supply is a far bigger priority now?

It absolutely is a bigger priority. But it’s also a smaller threat. You need to appreciate that North America has become much more energy independent and secure than it has ever been. Both US and Canada are producing at record levels. Combined, we now produce more than the Middle East (41 million boe/d vs 38 million boe/d). And Canada has taken a growing share of US imports (now 60%) even as their import levels have declined.

But there are two risks on the horizon: the first is that oil is a non renewable resource and the US is expected to reach a peak in shale oil production in the next few years. No one wants to go back to the days when OPEC + had dominant market power. I think there will be a lot of demand for Canadian oil to fill the gap left by any decline in US oil production. And Norway’s production is expected to peak imminently as well.

The second is the need from our allies for LNG. Europe is still dependent on Russia for natural gas, energy demand is growing in Asia, and high industrial energy costs are weighing on both. More and cheaper LNG from North America is highly important for the energy security of our allies, and thus the western alliance as it faces a challenge from Russia, China and Iran.

Canada has little choice but to follow the US lead on many issues such as EVs and tariffs on China. Regarding energy policy, does Canada’s relative strength in the oil and gas sector give it a stronger hand when it comes to having an independent energy policy?

I don’t think we want an independent energy policy. I would argue we both benefit from alignment and interdependence. And we’ve built up that interdependence on the infrastructure side over decades: pipelines, refineries, transmission, everything.

That interdependence gives us a stronger hand in other areas of the economy. Any tariffs on Canadian energy would absolutely not be in American’s interests in terms of their energy dominance agenda. Trump wants to drop energy costs, not hike them.

I think we can leverage tariff exemptions in energy to other sectors, such as manufacturing, which is more vulnerable. But you have to make the case for why that makes sense for US, not just Canada. And that’s because we need as much industrial capacity in the west as we can muster to counter China and Russia. America First is fine, but this is not the time for America Alone.

Do you see provinces like Alberta and Saskatchewan being more on-side with the US than the federal government when it comes to energy?

Of course. The North American capital that is threatening their economic interests is not Washington DC; it’s Ottawa.

I think you are seeing some recognition – much belated and fast on the heels of an emissions cap that could shut in over 2 million boe of production! – that what makes Canada important to the United States and in the world is our oil and gas and uranium and critical minerals and agricultural products.

We’ve spent almost a decade constraining those sectors. There is no doubt a Trump Admin will be complicated, but at the very least it’s clarified how important those sectors are to our soft and hard power.

It’s not too late for Canada to flex its muscles on the world stage and use its resources to advance our national interests, and our allies’ interests. In fact, it’s absolutely critical that we do so.

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Energy

What Will Be the Future of the Keystone XL Pipeline Under President Trump?

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From EnergyNow.ca

By Terry Winnitoy, EnergyNow

The Keystone XL Pipeline, proposed in 2008, was designed to transport Canadian crude oil from Alberta to refineries in the United States, specifically to Steele City, Nebraska, and onward to refineries in Illinois and Texas, as well as to an oil pipeline distribution center in Cushing, Oklahoma.

Spanning approximately 1,179 miles and designed to transport up to 830,000 barrels of oil per day, the pipeline promised significant economic and energy security benefits. However, it became a focal point of political and environmental controversy, leading to its eventual cancellation by Presidents Obama and Biden.

Here’s a brief look at its history, the reasons it should have been built, the political dynamics that led to its cancellation and will President-elect Trump revive it?

Why the Keystone XL Pipeline Should Have Been Built

Economic and Job Creation

The pipeline was projected to create thousands of construction jobs and several hundred permanent jobs, providing a significant boost to the economy. It was also expected to stimulate economic activity through the development of related infrastructure and services.

Energy Security

By facilitating the efficient transport of a large volume of oil from a stable and friendly neighboring country, the pipeline would have reduced American dependence on oil imports from more volatile regions, enhancing national energy security.

Environmental Safety

Pipelines are generally safer and more environmentally friendly for transporting oil compared to rail or truck, with lower risks of spills and accidents. The Keystone XL was designed with the latest technology to minimize leaks and environmental impact.

Regulatory Oversight

The project underwent extensive environmental reviews and was subject to strict regulatory standards to ensure it adhered to environmental protection and safety measures.

Political Reasons for Cancellation

Environmental Activism

The pipeline became a symbol for environmentalists who opposed further development of fossil fuel infrastructure. They argued it would contribute to climate change by enabling the extraction and consumption of oil sands, which are more carbon-intensive than other oil sources.

Obama’s Cancellation

President Obama rejected the pipeline in 2015, citing environmental concerns and its potential impact on global climate change. He argued that approving the pipeline would have undercut America’s leadership on climate change.

Trump’s Reversal and Biden’s Final Cancellation

President Trump revived the project in 2017, citing economic benefits and energy security. However, President Biden canceled it again on his first day in office in 2021, fulfilling a campaign promise to prioritize climate change issues and transition towards renewable energy.

Political Symbolism

For both Obama and Biden, the decision to cancel the Keystone XL Pipeline was also a symbolic gesture, demonstrating a commitment to environmental sustainability and a shift away from fossil fuel dependence in line with their administrations’ climate policies.

Will President-Elect Trump Reinstate It?

Currently, there is no definitive answer on whether President-elect Trump will reinstate the Keystone XL Pipeline. His previous administration showed support for the project, citing its potential economic and energy security benefits. However, reinstating the pipeline would require navigating significant political, legal, and environmental challenges that have developed over the years.

It would also depend on the current geopolitical, economic, and environmental priorities at the time of his taking office. The Keystone XL Pipeline’s history is a complex tapestry of economic aspirations, environmental concerns, and political maneuvers.

Its cancellation has been a contentious issue, reflecting the broader national and global debates over energy policy and climate change strategy. Whether it will be reinstated remains a significant question, contingent on a multitude of factors including political will, environmental policies, and market dynamics.

That all said, re-instating its approval might be the perfect “in your face” moment for Trump to Obama and Biden as he begins his second term of presidency. We’ll have to wait and see.

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