On the Discreet Charm of Energy

Former Venezuela Presidential Chief of Staff Beatrice Rangel on one of the immortal causes of strife among nations.

I will always remember the great geopolitical mind of our times directing me towards the study of energy.

To his mind, energy was “the power gatekeeper who controls energy and can force following even on the fiercest of enemies.” I thus took the course with Dan Yergin en lieu of one on new technologies offered at MIT.

Time has proved my advisor right. When correctly analyzed, most ingrained conflicts have their roots in energy possession. Energy drove most conflict in ancient times as well as those of the 19th century when control of European rivers was fundamental to access energy production which was basically generated by charcoal and hydropower.

When oil entered the world scene, its geopolitics drove world powers to completely unknown or forgotten geographies, except for Texas perhaps, and oil seemed to have a proclivity to nest in intimidating regions.

Today oil is about to pass center stage to a basket of energy sources where natural gas would most probably reign with solar supporting most for uses different from transportation.

But its demise would seem to have been orchestrated by a world leadership that learned from past conflicts and has little taste to repeat the carnage of the two World Wars or to shoulder the economic consequences of conflict.

To be sure, most economies are mid-way through the transformation of industrial to digital societies with the political stress this generates as there always are losers in the process that need to be supported to survive in the new environment lest you want them to follow populist leaders.

Also, while institutional restructuring takes place, debt has been mounting and wars bring back home veterans that need special health services that are beyond the capacity to pay of most governments.

In short, no one has the appetite for an oil-induced war nowadays.

The world leadership has thus taken a very cautious stance at energy redeployment entailing the creation of a strong network of energy concerns that are slowly building the pillars of the next world energy matrix. Among them significant exchanges take place on daily basis. These exchanges are building an energy matrix that supports the value chain from different sources and reduces the cost of generation, thereby creating new efficiencies.

This explains the rather passive attitude of most law enforcement authorities concerning deep and ingrained corruption in state owned oil companies such as PDVSA in Venezuela or NNPCO in Nigeria.
But corruption has taken an unexpected turn that is threatening to bring down the carefully crafted world energy grid that would substitute for oil. Corruption is about to penetrate that grid with quite unwanted establishments.

Notably among the newcomers is organized crime who seldom leaves behind its twin brother terrorist financing.

It so happens that both PDVSA and NNPC were about to fall pray to these siblings when greed served law enforcement agencies notice. The Venezuelan leaders of the company that had reached the Fortune 500 status began to stash mountains of cash in Andorra. And because they showed off their riches to a porter at a very snobby hotel in Paris, they ended up being investigated first by Surete, then by FinCen, and ultimately by the U.S. Justice Department.

Soon the wires deployed by organized crime and terrorist financing became evident. The U.S. forced the Spanish authorities to arrest four former PDVSA officials and who then decided to cooperate, which led to new and more forceful sanctions by the U.S. on the Venezuelan management government team.

In Nigeria the West chose to support a leader that would reign in corruption: Muhammadu Buhari, a peculiar Nigerian who, according to the Financial Times, “has no foreign accounts, lives in the same house for the last three decades and spends weekends in a farm he keeps since his times in the military.”

Mr Buhari has been on a clean-up mission ever since taking power. There have been several attempts on his life that have been kept confidential. He is now restructuring NNPC with a view to turn it into a Fortune 500 company before oil gives up its protagonist role in the energy temple.

The PDVSA indictments together with the Nigerian restructuring promise to produce more material for successful Netflix series than the Harry Weinstein Story.

Indeed, both exercises have the ingredients to become mile markers for this decade given that the scandals reveal the existing degree of coziness tying together the elites of the world energy concerns; public officials in so called emerging markets and the never missing Wall Street Commodity traders.

On the capture patrol there are the new heroes that do not work for the CIA or MI5 anymore but for the Financial Action Task Force (GAFI), Interpol and FInCen. Something to turn you once again into a couch potato!!

Published by LAHT.com on Monday November 27th, 2017

*The opinions published herein are the sole responsibility of its author.*