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Business Daily
What next for Venezuela?
00:18:31
The country appears to be pursuing a new economic path
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- [00:00]
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- [01:17]
Rahul Tandon
Hello and welcome to Business Daily from the BBC World Service. With me, Rahul Tandon. Is Venezuela's oil industry starting to flow again? Today we're returning to the country to find out what's changed since the removal of Nicolas Maduro.
- [01:32]
Maria Carina Machado
Venezuela has also agreed that the United States will immediately begin refining and selling up to 50 million barrels of Venezuelan crude oil.
- [01:41]
Rahul Tandon
So sales might be going up, but should all the focus be on oil?
- [01:45]
Ricardo Haussmann
We are never going to be as rich as we were in the past if we are just going to rely on oil.
- [01:51]
Rahul Tandon
That's today's Business Daily from the BBC World Service.
- [02:00]
Gideon Long
The United States says it struck targets in Venezuela and captured the country's president and his wife.
- [02:07]
Rahul Tandon
Now, I'm sure many of you remember Those sounds from the 3rd of January, a dramatic moment for Venezuela. Here in our studio I've got Gideon Long, who knows Venezuela very well. You remember that day, don't you?
- [02:21]
Gideon Long
It was an astonishing day, Rahul. Especially for me having been to Venezuela so many times during the time that I was working as the Financial Times correspondent. So during that time I went to venezuela probably about 12 times, I'd say during those five years. I mean, for me it was a real education in what a full scale economic collapse looks like. The hyperinflation was just off the scale. I mean it's been compared to the. The most notorious bouts of hyperinflation in history. The Weimar Republic in Germany in the 1920s, or Hungary and Greece in the Second World War, or Nicaragua in the 1980s. Massive hyperinflation. And just in those five years, the government lopped 11 zeros off the banknotes, and that obviously led to a huge exodus from the country. And living in Colombia, I saw this because it's a neighboring country and well over a million Venezuelans flooded into Colombia. And one image that really sticks with me is being on the bridge that separates Venezuela from Colombia and seeing Venezuelan women walking over that bridge bringing plastic bags with their own hair in them that they cut off. And they would sell that hair on the Colombian side of the bridge just for a few dollars, and then they'd walk back into Venezuela. They were that desperate.
- [03:30]
Rahul Tandon
That point you raised there is one of the reasons why we're doing another program. It's one of the questions we want to look at. When will Venezuelans go back home now that Nicolas Maduro has gone? On? The day we made the first program, we spent a lot of time thinking, what should we focus on? We went for oil because Venezuela has the most proven oil reserves in the world, more than 300 billion barrels. And what we want to do now is look at what has changed since Nicolas Maduro went. And I suppose one of the big things that we've seen is that the interim Venezuelan president, Delsey Rodriguez, has announced that foreign investment will now be allowed into the industry. What good is it if we have the largest reserves on the planet, if we cannot turn them into salaries, into hospitals, into food, into education? This law will allow us to take a historic leap forward. It will allow Venezuela to convert those oil reserves into happiness with the Venezuelan people in charge of them.
- [04:36]
Gideon Long
It was kind of amazing to hear Del C. Rodriguez, in the Venezuelan national assembly, which is packed with government supporters, passing into law what was effectively an overhaul of the nationalist legislation which had been passed by Hugo Chavez two decades earlier.
- [04:50]
Rahul Tandon
It's almost moving against everything that she and Nicolas Maduro and Chavez stood for.
- [04:56]
Gideon Long
Absolutely. And if we look at what that law means, up until now, if you were an oil company working in Venezuela, you had to work alongside pdvesa, the state oil company. This law allows foreign companies to effectively manage oil fields of their own.
- [05:13]
Rahul Tandon
So we can say that after the removal of Nicolas Maduro, quite quickly, we saw a significant change in the Venezuelan oil industry. I suppose the question is, how did the Americans react?
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Maria Carina Machado
The plan is for them to spend at least $100 billion to rebuild the capacity and the infrastructure necessary. Venezuela has also agreed that the United States will immediately begin refining and selling up to 50 million barrels of Venezuelan crude oil, which will continue indefinitely. We're all set to do it. All of the companies here today are going to be treasured partners in bringing the nation of Venezuela back to life, restoring its economy and generating great wealth for their companies and for their people, and also great wealth for the American people.
- [06:03]
Gideon Long
Yeah, Donald Trump there, speaking after he had had that meeting in January with executives from American oil companies.
- [06:11]
Rahul Tandon
It's easy to be upbeat, isn't it? It's easy to say things, but doing them. We know that Chevron have been in from the start, but all those other US Companies are out.
- [06:22]
Gideon Long
So, I mean, that's the thing. You have to remember the history here. If you go back maybe, say 15 years, 20 years, the likes of ConocoPhillips, Exxon and Chevron has been the one exception that stayed there. Everybody else left. Chevron has stayed and it's managed to get licenses to operate in conjunction with PDVESA and his joint ventures for all of this time. Let's hear from its vice chairman, Mark Nelson.
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Chevron has been a part of Venezuela's past.
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Gideon Long
We are certainly committed to its present.
- [06:51]
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And we very much look forward as.
- [06:52]
Gideon Long
A proud American company to help it build a better future. I guess the question is, will other companies follow suit? Will they go back into Venezuela? And I have to say, you know, from what I've seen, it doesn't look particularly appetizing for most of the US Oil companies. Exxon, for example, their CEO Darren Wood, said that Venezuela is uninvestable at the moment, and it's concentrating very much on neighboring Guyana and other companies. Other oil companies have warned of just how difficult it will be. I was looking at a report from Rystad and their energy consultancy, and it says that to get back up to 3 million barrels a day of production and output, which is what Venezuela was producing at its height in its heyday, it will take more than a decade and it will cost $180 billion. So the challenge is absolutely enormous. And Venezuelan crude oil is heavy crude. It's not the best quality. It doesn't necessarily fetch the best price. And it's in the Orinoco basin. So it's in the east of the country, close to the Guyana border. This is jungle area. It's a pretty difficult area to operate in, and it's going to make it very difficult for companies to get that oil out of the ground.
- [07:58]
Rahul Tandon
You're listening to Business Daily from the BBC World Service.
- [08:05]
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- [08:33]
Rahul Tandon
I'm Rahul Tanden and today with my colleague Gideon Long, we're looking at what's changed in Venezuela since the removal of Nicolas Maduro. Often when we're looking at what businesses want on our programs here on the BBC World Service, the thing that businesses keep telling us is stability, political stability. So interim president comes in, Delsey Rodriguez, and she's somebody who knows the oil industry very well.
- [09:03]
Gideon Long
She does, but for most of her time in power, she was in various different jobs. She's been the foreign minister in Venezuela. She was the communications minister for a long time. She's head of the Constituent assembly, which is effectively there to rubber stamp the government's decisions. And it's only recently, really, that she's been managing the economic recovery, if we can call it a recovery, and that she's been dealing with the oil company. So she does have some experience in the oil industry, but not a huge amount.
- [09:30]
Rahul Tandon
No. And she's not the only name. When we talk about Venezuelan politics, a lot of people will know of Maria Carina Machado because she won the Nobel Peace Prize. Some people say she should be the person running the country at the moment. Let's hear what she's had to say about Delsey Rodriguez.
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Maria Carina Machado
She's the main ally and representation of the Russian regime, the Chinese and Iranians, but that's not the Venezuelan people and that's not the armed forces. So I am profoundly, profoundly confident that we will have an orderly transition. The result of a stable transition will be a proud Venezuela who's going to be the best ally United States has ever had in the Americas.
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Rahul Tandon
Best ally the United States has ever had. But she's not in charge, is she? And we don't know when she might be in charge, if she'll be in charge. And all those questions, you can imagine those big oil boards will be sitting there saying, yeah, Venezuela, all that oil, Maduro's gone, things are changing. We can go in there now, but let's wait a little bit longer and see how the political situation unfolds.
- [10:40]
Gideon Long
And it's just so unclear as to how it will unfold.
- [10:43]
Rahul Tandon
Quite a lot has changed. We've talked, haven't we, about the law changing in Venezuela for foreign investment. We've had this $2 billion agreement between the US and Venezuela, but we're still seeing tankers being seized where there was just the other day in the Indian Ocean, there was a tanker seized, supposedly carrying Venezuelan oil. Let's listen to Peter Hegseth, the US Defense Secretary.
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Gideon Long
The oil blockade, the quarantine of oil out of sanctioned or stateless vessels continues.
- [11:12]
Rahul Tandon
That leverage will continue.
- [11:13]
Gideon Long
So our military is prepared to continue this. As he said, the president, when he speaks, he means it. He's not messing around. We are an administration of action to advance our interests. Pete HEGSETH There, the U.S. defense secretary. And just to give you an idea of how this has worked in recent years, since sanctions were Imposed back in 2019, Venezuela has still been exporting its oil, but it's been difficult for it to do so. So what happens is that ships arrive in Venezuelan ports. Often they're sanctioned ships. They load up with oil, they turn their transponders off so they can't be traced, and then they leave. And quite often they then offload that oil onto other tankers and it finds its way into the legal oil market. And also some of that oil has been going to Cuba. We understand that that has now been stopped by the US So no oil in January went to Cuba.
- [12:03]
Rahul Tandon
Yeah, I suppose it's good news for Venezuela that it can now get more oil out, but it's going to the US as well as going to China now could restart going to India as well. But there are a lot of other countries where investment can come into, and that is going to be a problem for Venezuela. It's something that the US Secretary of State Marco Rubio has been talking about.
- [12:25]
Marco Rubio
Venezuela has a lot of oil. They do. But there's a lot of oil in other places, too. Companies are only going to invest somewhere if they know we're going to invest. We're going to make our money back with a profit and our land isn't going to be taken from us. And if you try to, there's a court we can go to and contracts we can enforce. That's the level of certainty that we're talking in terms of security. That's part of this transition process, that's part of this recovery process, is to normalize their industry, because if not, they'll just invest the money in Guyana or they'll just invest the money in some other part of the world that has Oil, they're not going to risk it.
- [12:54]
Gideon Long
Marco Rubio there. The world has changed and the world doesn't need Venezuelan oil quite the same extent that it used to. The US doesn't need Venezuelan oil to the extent it used to because it has so much of its own. And so I think the danger for the country is that they just find that the world doesn't need their oil to quite the same degree as they once did.
- [13:12]
Rahul Tandon
And also that oil price is coming down and there's a glut of oil this year. So even if they get the oil out of the ground, as you were saying, there isn't really that huge need for this Venezuelan oil.
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Gideon Long
No. And you do wonder if the oil price continues to drift downwards, at what price Venezuelan oil is actually financially viable.
- [13:31]
Rahul Tandon
And we've got an oil price around what, in the 60s now, you know, nowhere near that hundred dollar a barrel that people were talking about at one stage. What is important, Gideon, and we go back to where we started this conversation. It is still the main industry for this country. And if the economy is going to improve, then it needs this industry to grow.
- [13:53]
Gideon Long
Yeah, I think it needs the industry to grow. It needs the oil industry to grow, but it also needs to pivot away from oil to some extent and to try and develop its in other ways. Now it should be said that the economy has improved slightly. I mean, I would say 2019, 2020 were probably the low for Venezuela since then. Actually, this was under Nicolas Maduro. He scrapped the exchange rate, he relaxed import controls. Oil production has crept up a little bit. There's dollarization now. So hyperinflation has kind of burnt itself out. But although the inflation rate is much better than it was, it still has the highest inflation rate in the world. It's around 270% still.
- [14:28]
Rahul Tandon
Those figures, when you quote them, you sort of struggle to imagine what it's like living in that situation. And a lot of Venezuelans decided they couldn't leave in that situation and have left the country, more than 7.9 million of them over the last decade or so. I also work on another World Service program, outside source and after the Maduro overthrow, we spoke to a lot of people inside Venezuela just to get a sense of what life is like. And I'll be really interested to get your reaction as somebody who's been there.
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Barbara (Tour Operator)
The amount you get paid, it's not enough to buy the things you need.
- [15:03]
Rahul Tandon
Every day things are getting more and.
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Barbara (Tour Operator)
More expensive because the Oliver is decreasing its own value.
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Maria Carina Machado
Whatever dollar I make, I have to use it on food, first for my son, then for myself. And the cost of normal living. Life here is just so high, so difficult, employers pay so little. 2025 has been the worst financial year of my life.
- [15:25]
Gideon Long
Yeah, I mean, really interesting, those quotes, I think, and a surprise to me. I haven't been to Venezuela for a few years now. But the people that you spoke to there are saying exactly the same things as they were saying when I was there in 2020, 2021. And I remember on my last visit to Venezuela, I really came away and I thought, things are getting better. High proflation has burnt itself out, but clearly it's still a big problem.
- [15:47]
Rahul Tandon
I suppose that we want to look ahead. And I know somebody that you've spoken to a lot, and a lot of people turn to him when they're looking to see how Venezuela can get itself developed once more and get those industries moving, is Ricardo Haussmann, a renowned Venezuelan economist, former planning minister and a Harvard professor.
- [16:07]
Ricardo Haussmann
When I was born, Venezuela was producing 3 million barrels of oil and we were 7 million people. Now we are not producing 1 million barrels of oil, so less than a third, and we are 35 million people. So we are never going to be as rich as we were in the past if we are just going to rely on oil. But we have 12 million hectares of land to develop. We have mineral resources. We have hydropower potential. We have diaspora. It's the most educated migrant group in the us so there's a lot of potential to do many things.
- [16:38]
Gideon Long
You have to admire Ricardo Haussman's optimism there, don't you, Rahul? But he's right. Venezuela does have a massive potential. Gold. It has coltan, it has diamonds, it has bauxite. It has a lot of mining riches. It used to produce rice, coffee and cacao in big quantities. It used to have a textile industry. It used to produce concrete and chemicals. And I think the key is going to be to, yes, to recover the oil industry, but also to try and promote other industries as well, to have a more diversified economy.
- [17:08]
Rahul Tandon
And that is an important economic principle, isn't it? Because we have many countries that have tied themselves to commodities, and if the price of that commodity goes down, you can be in big trouble.
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Yeah.
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Gideon Long
And to mention one of the other industries which Venezuela has and which it could benefit from, tourism.
- [17:26]
Rahul Tandon
Interesting you said that because I was speaking to Barbara. Her family left Venezuela just before she was born, but she sees herself as a very proud Venezuelan. She wants to go back. She's now a tour operator working outside the country.
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Barbara (Tour Operator)
I dream of going back to the very beautiful places that Venezuela has. I get to help people go to the best beaches in the Caribbean, but I can't help them go to Los Roques or Margarita. I help people go on beautiful hikes in Italy, but I would love to have them go to Merida and experience the Andean mountains in my own country, or have them see the wildlife in the Amazon of our country. That's the beauty that we have. Not just places, but people. And that combined is why so many of us want to go back.
- [18:09]
Rahul Tandon
When she said that to me, it made me feel like I want to go. But of course, the political situation means it's difficult. Many governments advise against travel. But you've been. Go on, tell me where you went.
- [18:20]
Gideon Long
Yeah, I mean, when I hear Barbara speak there, it reminds me of my final trip to Venezuela, which was in 2022. And all of the previous trips I'd been on, all I'd seen really was hyperinflation, an economy which is falling apart. It was always fairly depressing. And on my last trip, I thought, you know, I want to see some of the beauty of this country, which I'd heard about, which I hadn't really seen. And I went out of my way to take a few days off work, and I went to the Canaima national park, which is home to Angel Falls, the world's tallest uninterrupted waterfall. And it is a stunningly beautiful place. Very few people going there at the moment, certainly foreign visitors. There were Venezuelan visitors when I was there, but it's a wonderful place. And I just got a little glimpse of what the Venezuela of the future.
- [19:03]
Rahul Tandon
Could look like when we thought about making this program again. And we've been talking quite a lot about it over the last couple of days. I've been thinking how much has been achieved since Nicolas Maduro left economically for Venezuela. We've had that change in legislation. We have US Companies now can take oil, import it and export it out. So quite a lot has happened. What do you think?
- [19:27]
Gideon Long
Early days, I mean. Yes, you're right. So the legislation has changed, but we're still a long way off. A situation where the likes of Exxon or Repsol are actually going in and operating in Venezuela. And I think it's going to be a long, long time before the Venezuelan oil industry recovers and a long time before the country manages to diversify its economy away from oil into other things.
- [19:50]
Rahul Tandon
Well, listen, I always love talking to you about it. Thank you for your. It's been great for your insights. And who knows, we could see you back in Venezuela soon. That's it for today's edition with me, Rahul Tandon and Gideon Long. You can listen back to our first episode on the situation in Venezuela, when we covered the story in January. Just search for Business daily wherever you get your BBC podcasts.
- [20:19]
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