Venezuela’s Demise Masks Untapped Riches

Featuring Russ Dallen

Russ Dallen of Caracas Capital Markets says that Venezuela is one of the richest countries in the world, but is unable to extract any of that wealth due to the Cuba-style communism imposed on a population of 31 million people. Russ questions whether there will be any opportunity in the future to benefit from some of the most valuable assets on earth. Filmed on December 7, 2017, in Miami.

Published on
18 December, 2017
Topic
Latin America, Oil, Politics
Duration
30 minutes
Asset class
Commodities, Bonds/Rates/Credit, Currencies
Rating
19

Comments

  • PO

    Paolo O.

    14 5 2018 04:02

    0       0

    What is the scenario in the future? Collapse, Intervention? We got the new Cocaine cowboys in town shipping drugs all ove the world and who does not get its cut in the importing Country? I would like to hear more about the prospected solution and not the status of things now, we all have access to it. Other that that I enjoyed the economical perspective.

  • JH

    J H.

    22 2 2018 09:45

    3       0

    I came back to this video just for fun to listen to the intro.

    The music, the build up, the visual and audio effects, the editing, the joke, it's better than most movies. Such good hype.

  • MA

    Mikael A.

    30 12 2017 00:25

    2       0

    Very original and interesting interview. Keep up the good work

  • BP

    Besar P.

    29 12 2017 04:07

    0       0

    Excellent interview. Thanks.

  • FC

    Fractal C.

    28 12 2017 09:37

    0       0

    Wow

  • TS

    Todd S.

    27 12 2017 00:46

    0       0

    Amazing episode. Thank you Russ for the insight.

    Great Job RV for putting this together!

  • VS

    Victor S.

    26 12 2017 12:37

    1       1

    Who was NOT educated by Russ ? This was a great expose’ of Venezuela ,but more so ,of Communism/Socialism. This is what REAL VISION TV NEEDS MORE OF FOR FUTURE INVESTORS. IT SHOWS WHERE AND WHERE NOT TO INVEST!

  • Nv

    Nick v.

    26 12 2017 05:47

    1       0

    This is an exceptional piece. Excellent explanations Russ. Thank you

  • ZH

    Zack H.

    25 12 2017 17:16

    0       1

    The people that support the thesis that oil is did and ev is future dont understand how much cheap oil is still out there in the world. If Ven could get their govt and county back they could be a glob

    • TK

      Thomas K.

      29 12 2017 06:15

      2       0

      While I'm not a petroleum geologist, everything I've read about their reservoirs over the years suggests that "cheap" isn't an accurate characterization of Venezuela's reserves. Their proven reserves mostly fall on the heavy- to extra-heavy, sour end of the spectrum, frequently with high metallic content. Moreover, their more conventional reservoirs, e.g., Maracaibo seem to be in the production decline phase.

      Consequently, they have resorted to exploiting the Orinoco belt extra-heavy formations to maintain production levels. While less viscous than Canadian oil sands, Venezuelan extra-heavy requires considerable processing to transform its API gravity up to something marketable. We're talking about crude that's heavier than water: it has been substantially biodegraded by the presence of brew of aerobic and anaerobic bacteria, water, and oxygen, ultimately leaving an oil dominated by longer carbon chains. It's difficult to extract (typically horizontal drilling with down-hole pumps to push the thick liquid up to the wellhead), difficult to transport (typically mixed at the wellhead with a less viscous substance called a diluent in order to be pumped through pipelines, which requires separate diluent pipelines to complete the loop from the coastal upgrading plants back to the wellhead), and expensive to process (it must either be mixed with lighter crude, or put through a capital-intensive upgrader plant that breaks down the long hydrocarbon chains into shorter ones that can be sold to a refinery, in essence a simple refinery to pre-refine the product).

      Alas, these massive investments produce a steady "drip" of oil that merely produce a dependable income stream, exhausting economic reserves over one to two *centuries*. While blessed with vast proven reserves, the physics involved are markedly different from Saudi. Simply put, these reserves are not disposed to the type of high-volume output that could resolve Venezuela's solvency issues over the course of a decade. The capital investments required to quickly exploit these fields are not economic: highly viscous reservoirs simply require a lot more infrastructure to tap per unit of flow.

  • WM

    William M.

    22 12 2017 19:32

    8       0

    I guess the 12 down votes are cuban or venezuelan socialistas?

    Great insight and Russ obviously feels for the people. I salute his bravery and hope he is not at risk by bringing us this viewpoint. It remains a surprise that the masses haven't rushed the troops and taken over. Eventually something will snap.

  • jd

    john d.

    22 12 2017 07:30

    0       0

    Thanks RV and Russ. Fantastic perspective/ information and I loved the visuals too. I certainly hope, for all Venezuelans that the situation is sorted soon and in a bloodless way ... maybe too optimistic.

  • PB

    Pieter B.

    22 12 2017 06:48

    1       0

    Excellent video! I spent a few months in Venezuela this year and love the country and its people. Thanks a lot for the content!

  • AW

    Anak W.

    21 12 2017 18:07

    3       0

    Please do Thailand on Discovery series. I really want to see your view as an observer.

  • PM

    Paul M.

    21 12 2017 13:21

    1       1

    Interesting points and calculations but very political and pro-US view. Point is Venezuela is by far the most important geopolitical point in the world right now. Russia and China (adversaries as Mr. Dallen calls them) will stand their guard given what's at stake.

  • JW

    J W.

    21 12 2017 05:14

    0       0

    I love the country level deep dives. This, while not very actionable to me as a retail investor, was amazing.

  • WP

    William P.

    21 12 2017 04:33

    4       0

    These interviews are why I subscribe. It would be interesting to do a series with similar insight into other countries.

  • HF

    Hassan F.

    20 12 2017 10:08

    4       6

    How can this come to be. The country with the most oil on earth on begging on its knees. Also why the FUCK is shitty little Cube getting 100000 barrels of oil a day. I suppose its for "consulting services". Well let Venezuela be a lesson of all you who wants to vote for Hilary Clinton and Jeremy Corbyn.

  • FV

    Fredrik V.

    20 12 2017 06:57

    9       0

    This format, focus and message delivery....wow.

  • GO

    Gary O.

    20 12 2017 05:01

    5       0

    Very interesting subject narrated by an expert with first hand experience is a gift. Bye bye Venezuela.

    Bravo to the changing Real Vision formats. You guys rock! Keep it coming.

  • MC

    Minum C.

    19 12 2017 20:10

    1       0

    Nice video. I wonder if silver coins are being used to buy food and other basic necessities. Regarding investing in beach front land, I'd guess one needs to be very thorough in understanding how the title deed system works (or doesn't work) there. I wonder if block chain technology can be used to legitimize the title deed process in nations that don't currently have a reliable system. I suspect if a Government/Army is corrupt, nothing else really matters.

  • SR

    Steve R.

    19 12 2017 10:08

    7       0

    Very interesting.
    But when you get oil, corruption, drugs, China, Russia, local factions all desparate for power and influence you just know its not going to end well. You might indeed be able to get 'unbelievable' assets 'dirt cheap', but they can be taken from you in the blink of an eye with zero recourse.

  • JD

    John D.

    19 12 2017 09:04

    5       1

    Fascinating... Great piece !!! Would love to see more countries presented in a similar format...

  • SD

    Stephen D.

    19 12 2017 02:25

    12       3

    Venezuela provides "‘inspiration to all of us fighting back against neoliberalism and austerity in Europe and showing us there is a better way of doing things. It’s called socialism, it’s called social justice and it’s something that Venezuela has made a big step towards." Jeremy Corbyn Leader of the UK Labour Party 2013

    • CM

      Chris M.

      21 12 2017 00:31

      2       0

      It is inequality and lack of opportunity that drives this. It has been true across centuries and leads to the downfall of governments/rulers. We are seeing this play out in a number of countries around the world.

    • SD

      Stephen D.

      22 12 2017 03:44

      4       0

      You are absolutely right Chris. The Gini coefficent in Venezuela before Chavez showed it to be one of the most uneven distributions in the world. Very high Gini coefficents and democrecy are a dangerous combination and a warning for all wealthy nations. People like Chaves (or Corbyn) spouting socialism will be listened to. And if they win we can see from Venezuela what the results are.

  • GS

    Gordon S.

    19 12 2017 02:01

    0       0

    Thank you for the insights! I struggle much with the ethical ramifications of dealing with such investment opportunities as land and resource grabs once the local governments is toppled, but I guess under these circumstances, ethics fly right out of the window for quite a while. Such a sad story...

    Anyways, as a retail investor and student I do not have access to such fancy derivatives as CDSs, but I would still like to provide a low level investment opportunity: I am personally collecting failed currencies: I’m a proud trillionaire in Zimbabwe dollars and own 500 billion German Weimar marks (though the billion mark was simply stamped onto the 500 mark bill, so I feel slightly duped). To my collection I would very much like to add some Venezuelan bolivars, but unfortunately I can’t really find any on eBay. On this slightly more exotic market, 20k bolivar bills are often trading around $10 (so 50X their “real value”) on low volumes.

    I would be interested in buying a couple of million bolivars? I would in particular be interested in low denomination cash bundles, though I’m not sure how easy it would be to send out boxes of cash out of Venezuela to Germany? I’d love to resell some bolivars to my socialist-fond fellow students and to some extend flood eBay with them. If anyone knows anyone willing to make a market and who may wish to partner up with me (I'll of course share profits :)), feel free to shoot me an email: gordon.schucker@gmail.com. Thanks or good luck if you plan on taking advantage of this opportunity without me!

  • DB

    Darko B.

    19 12 2017 00:58

    5       3

    Yeah but we all know it's not "REAL" socialism, because real socialism works..........well that's what a purple haired, unintelligent fat feminist told me anyway. *rolls eyes*

  • JM

    John M.

    19 12 2017 00:46

    2       0

    I know Venezuelan expatriates who are too fearful to visit their own homeland due to concerns about violence. The situation seems quite desperate and IMO cries out for foreign intervention.

  • GF

    George F.

    18 12 2017 20:14

    4       0

    It might be interesting if he described how he and his family survive. How does medical care work. I gather you pay for medical care with cash, but how? Bolivars or dollars? Is the medical care and equipment available first rate? How is the food? Is it hard to obtain food? How do you do banking?

    • ML

      Michele L.

      19 12 2017 05:50

      0       0

      my thoughts exactly! and also whether he has concerns for their safety as the country unravels...(I'm sure a bulletproof vehicle is a good start!)

  • RF

    Richard F.

    18 12 2017 19:29

    2       1

    Phenomenal piece. And I thought the kleptomaniacs in the Kremlin were bad...but clearly they have a way to go. I'm puzzled who would give this a thumbs down, unless Maduro and his buddies subscribe to RV.

  • NB

    Nathan B.

    18 12 2017 18:10

    6       0

    This was a great video! I'd love to see more of these types of videos on other emerging markets as well.

  • MG

    Mohamed G.

    18 12 2017 17:41

    8       0

    This guy must clearly not fear for his life for talking so openly about the government while living in Venezuela! Good topic and would love to hear about good risk-reward plays.

  • DL

    Daniel L.

    18 12 2017 17:31

    4       0

    Truly excellent interview.

  • PM

    Patrick M.

    18 12 2017 16:46

    1       0

    Great topic!

  • BC

    Bryan C.

    18 12 2017 15:02

    4       0

    Follow this up with an investment recommendation video. After the government is overthrown (which virtually has to happen) foreign investment will be critical to getting this country back on its feet

    • RP

      Raoul P.

      18 12 2017 17:26

      9       0

      Ive been looking at/talking about beach land on the Caribbean coast for a while. Best buy it with no builds to reduce political risk.

  • EH

    Eric H.

    18 12 2017 14:40

    1       0

    best opening intro evvaaaa

  • rm

    russell m.

    18 12 2017 13:52

    3       0

    Why isn’t Maduro already sleeeping with the fishes? No one to do what must be done.

  • EG

    Eduardo G.

    18 12 2017 13:26

    45       0

    I was there a week ago visiting my family after 4 years and it is beyond shocking how bad the situation is. I would only add to this great video the following: It is no longer true that 80% truly want change. The situation got so bad that people can do nothing more than trying to keep up to survive. In essence, there are two countries in one: the first is the one for people who have access to the US Dollar (whether directly or indirectly through remittances), and the second is for people who can't even dream what a dollar looks like. The first subsector of the population is 2%, and for them Venezuela is the cheapest country on earth; whereas for the rest is simply hell. The Venezuelan government have taken crime to a whole new level: They have basically stolen the whole country for themselves, and have turned it into their own private estate, where they "allow" some people to live. Once the generational change happens, and remittances are over (because there's no one left to send it to), a new North Korea will be born, Caribbean style. At this stage only the US Government has the power to change this via intervention, but then there are all of the well-know political costs associated to this.

    Thanks RealVision for yet another great video.

    • RL

      Radu L.

      19 12 2017 14:16

      2       0

      can you go into detail?with my scarce information most ppl are blaiming Maduro for "betraying socialism". is there wide awarness about how f*up socialism and want to get rid of it or are ppl still waiting for some white socialist knight to replace the "bad socialists"?

    • RL

      Radu L.

      19 12 2017 14:17

      0       0

      how f*up socialism *is

  • TD

    Tomas D.

    18 12 2017 12:55

    2       0

    Great talk, I guess we'll have to see what China and Russia does? the US doesnt seem to be the one controlling the situation?

  • PU

    Peter U.

    18 12 2017 12:46

    6       1

    Very well done! I will be watching the country and looking for potential investment opportunities if the political situation turns for the better.

  • CD

    Chris D.

    18 12 2017 11:36

    6       1

    Great video, I enjoyed it. Really sad to see how this beautiful and rich country has been mismanaged and corrupted. Just imagine how the country would be like with a leadership as in Singapore or Japan (countries with zero natural resources)? It would be a paradise for sure. But now, it is only a paradise for gangsters and corrupt politicians..