Trump drinks Venezuela’s milkshake

It's been one week since President Trump got on truth social announced that the United

States of America had just entered into an agreement with the country of Venezuela. On the biggest oil deal in world history, all caps. This announcement was a little vague on the details, but more have come out since, according to the White House, the U.S. government, through the Pentagon, might be buying a stake in a Venezuelan oil company.

The Venezuelan government is going to give that company the exclusive right for 100 years to extract oil from 17 of its oilfields, and the U.S. will get a bunch of that oil for cheap. So yeah, eight months after Trump ordered the capture of the leader of Venezuela and told oil execs, we're going to be extracting numbers in terms of oil like few people have seen.

The U.S. government is apparently in the oil biz. We didn't know what to make of this. Venezuela, as we've talked about on the show before, has been blessed with one of the biggest reserves of oil in the world. Despite that, it is a poor country.

And its oil industry is just barely sputtering along right now. Under that has to do with politics, from American meddling to corrupt leadership, and part of it has to do with an idea we've covered before. The paradox of plenty.

“What happens when a country's whole economy is based on riches from one resource?”

But part of it, the part we're going to focus on today, because its relevant to Trump's announcement, has to do with foreigners. Who gets to tap into the country's massive oil reserves? Because for the last century, Venezuela has been wrestling with this other paradox. We're going to call it the cant live with them, cant live without them paradox.

You know how, sometimes you need help, but you don't like it when you get it? That has been the story of Venezuela's oil industry and outsiders. They have this long history of opening up to foreign investment and then shutting down again, opening up and shutting down again. Earlier this week, I called up a guy who witnessed this back and forth from the inside.

Hello. Hi. His name? Jose Angel Pereira Rembeck. His oil pedigree?

Strong.

I am the third generation.

His grandparents worked in Venezuela's oil industry at its founding when foreigners all but ran the show. His parents were part of its nationalization. Jose himself found his true love because of Venezuela's oil. He and his wife, Marvis, were in a chorus run by the state oil company.

She was a miso soprano, I was a baritum, and we met there.

“Young kid, you met in the state oil company's chorus?”

Yes. Yes. Yes. Give me a song. Give me a few notes.

And as Jose has been following the news out of Venezuela this week, he has been thinking about the lessons he and his family have learned as they've watched Venezuela open its fast reserves of oil to foreigners and then decide to shut them out. In particular, Jose himself had a front row seat to one moment in the 90s when just like now, Venezuela's oil industry was faltering. And just like now, they opened up their previously nationalized oil industry to foreigners. It was called, well, I'm going to need some help.

Hapertura Petrera, opening. Apertura, like the aperture of a camera, Apertura is opening, yes. Jose kind of led the charge of the Apertura. The last time Venezuela opened its doors to foreign investment in their oil sector.

“Me and my wife, you and your wife worked for the first project of the Apertura?”

Not very first, the very first project, yes.

So you're the perfect person to talk to about this? I was the guy that started all of this. Hello and welcome to play the money, I'm Nick Fountain. And I'm Erica Barris, there's been a lot of coverage of this evolving deal between the U.S. and Venezuela, some great stuff from our colleagues here at NPR about what the U.S. hopes to get from this and whether it'll work. The Climate Impacts, today on the show, what does this mean for Venezuela?

We're going to hear one take, the take of a Venezuelan oilman who's been through all this before. Everybody's saying, this deal is probably terrible for the Venezuelan people. Do you agree with that? No, let me tell you, I'm an oil and gas guy that knows the industry inside. Yeah, Jose, he's both optimistic and wary. Because he's seen it all, when Venezuela invited foreigners in, he was there to greet them.

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“All right, so what does Jose think about this news coming out of Venezuela?”

And a bit, we're going to hear his take. Why he thinks this deal between the US, this private Venezuelan company, and the Venezuelan government, could help a lot of people and where he thinks this all might go wrong, based on his experiences. His generational experiences.

Remember, he's a third-generation Venezuelan oilman, and from each of those generations,

you can get these picture-perfect little snapshots of the long drama-filled history of Venezuelas oil. From a time when foreigners reigned to the nationalization and back and forth again. Snapchat #1, a century ago. His grandparents meet cute. His grandpa, a Dutch drilling engineer, part of the original wave of foreign investment in and

exploitation of Venezuelas oil. His grandma, a Venezuelan nurse in a hospital run by an oil company. How they met is that he got an accident and they put him in the ER and she saw, "Ah, you know, a blonde blue eye guy's very cute."

“This, of course, was the first era of Venezuelan oil, foreign control, which eventually”

Venezuelan's got tired of, because too little money from their labor and their resources were going to them. Right, which brings us to snapshot #2. Now, it's 1967, and this photo is of Jose's parents, both oil workers, with suitcases. They're moving to Tulsa, Oklahoma, with cute little five-year-old Jose at his two sisters.

As part of a bigger plan. Before Venezuela could nationalize their oil industry, they needed trains up Venezuelan oil engineers. So, he says, "Venezuelas oil minister sent Jose's family and a bunch of others to train at the University of Tulsa to study at their world-class petroleum engineering program." 10 minutes, when the family is in the '60s, the US was very, very uncommon, let me tell you.

My best friend was in America, where we play cowboys and Indians and can you imagine who played the Indians?" Seven years later, snapshot #3. It's Jose and his family again, but he's a teenager now. It's the late '70s and they're back in Venezuela.

His parents are working for a new, nationalized oil company. Actually, everyone is. Venezuela has taken control of the oil. And it actually creates one state-run company, don't everything. But, totally, it's Venezuela, or Badeza.

So, there are still tons of American workers around. In fact, Jose and his family are living in this weird company town that looks like Texas. Picture it, it's Texas, but in the middle of nowhere. An oil field in Venezuela. That was like a copy-based of the US.

We have gold cores, we have bowling, we have pools, theatres, you know, we celebrated four of July, we celebrated Thanksgiving, we did Halloween, we did many American things. At that time, later, Jose and that Mezzles of Prano, he married from the youth chorus. They're grown. They have their own jobs with a nationalized oil company.

And for them, everything is great. Except after years of high oil prices and ballooning budgets and payrolls, the price of oil has dropped. Venezuela is starting to neglect its oil fields. Yeah, so maybe another snapshot, idle drilling rigs and pump jacks.

Jose says he was there to see it.

“And from it, he took a very important lesson.”

Now, in the industry, where you always have to be investing,

always be investing. ABI. If you don't, he says your oil field stopped being as productive. Any oil field can have around to 10 to 11 percent yearly that they decline.

So, Perez, I didn't have money to do that.

“And that's what the genius guys of that time created dapertura.”

Because they said, okay, let's do something. Let's bring international players so they can bring money. And that's how dapertura came. This is the moment we wanted to talk with Jose about the most, the aparatura, the opening. Because if you squint at least, it is analogous to what's happening now.

Of Rusty heap of an oil industry and an opening for foreigners to plow money into the economy. Jose, if you couldn't tell from his genius comment, it is a fan of that earlier aparatura. He says, he saw firsthand how letting in both money and expertise from outside of the country could benefit Venezuelans.

Yes, we mentioned before, he says he worked for the very first project of the aparatura.

Way back in 1992, he got himself hired by one of those foreign investors, a Japanese company. Which was exciting. Had you ever met a Japanese person before I had to buy a book, how to deal with Japanese? They sent him to Tokyo for months to get trained.

“And Singol Pareda got schooled in Japanese business culture.”

Well, for example, I became Pareda-san. Hey Pareda-san, Pareda-san, yeah, yeah, yeah. He picked up new business principles like the one where you try to get some consensus before making big changes. And it can be crazy.

But is you ever having a team of 20 people? You need that all that 20 people are in consensus. He takes time to put that out the oil industry usually works. No, I came with the American culture that he's like this. You know, Angie, if you're the boss, you'd make a decision.

He worked for a few years for the Japanese company building up oil field infrastructure. And then jumped over to an American company. Majority owned by Konako and Chevron, also part of the aparatura. Jose says those two companies brought new technology that Venezuela had needed for years. For example, a lot of Venezuela's reserves of oil are this kind of sticky,

sticky, tar-like stuff. Bad stuff. So we needed to have a way to produce that. Minnesota didn't have the technology. And these companies had figured out how to deal with the sticky,

sticky stuff. Essentially they diluted it, made a smoothie of it, so it could be transported in a pipeline. That was a technology that was brought by Chevron, by Konako, these companies. Yeah, they brought tons of new technology and also tons of money, just enormous amounts of investment.

So do you think that the aparatura worked?

The first year, the first decade worked very good.

Yeah, Jose says for the industry and for many, though not all Venezuelans, it worked very well. Foreign companies brought new oil fields online, fixed up the old ones, oil production nearly doubled. And all that investment meant lots of jobs for Venezuelans.

So Jose says he's been thinking a lot about the aparatura. As he's seen the news trickle out of Venezuela about this new deal with the United States. This is going to be like a Pertura 2.0. So that the Pertura divine the 90s. Yeah, this is going to be like a Pertura 2.0, yes.

The White House said the company they're doing business with is going to invest a hundred billion dollars in new oil production. And this week, Chevron said they're going to spend more than seven billion dollars over the next five years. Yeah, lots of cash.

And remember, the model always be investing.

Jose says that investment, you don't put it in Mars.

“You put it in Venezuela because you have to drill the wells.”

So to drill the wells, you have to have that truck driver. You need the chauffeur. You need the empanada lady that prepared that breakfast. You know, very important that she might be the most important person. Yeah, so I'm not kidding, you will need everything.

So that people can have a better life. But when Jose looks at the aparatura, he helps spearhead back in the 90s. He says it also includes a cautionary tale, which is when you open up Venezuela to foreign investment. And the foreigners seem to have the upper hand things can go sour.

Right, because here is how the aparatura 1.0 ended. As foreigners started reaping the benefits of their investments, a brush, red beret wearing populace, named Ugo Chavez, El Comondante, was gaining popularity. In 1998, he'd run for president and win,

partially on the promise of sharing the oil off, lifting people out of poverty. And detroning the oil elite. Shavez criticized Betavessa, the state oil company calling it a state within a state.

The problem that was happening with Betavessa,

that those guys that began to work with my dad, these guy became like, they weren't like kings. They weren't intouchable.

“They became very, you know, it was like a tyocracy, you know?”

Yeah, theocracy and oligopoly, and they weren't just going to let Shavez take their power. These guys didn't like Chavez, and they did kind of a plot to take Chavez and that created the national strike. In late 2002, oil workers, their management walked off the job.

It was a standoff between Chavez and the oil elite. There was violence in the street. Oil production dropped too close to zero.

Venezuela was starve if it's oil money.

They were thinking that if they do that national strike, and they squeeze Chavez, he would resign. That was their idea. That's what they thought. And look what Chavez did.

He fired 20,000 people. Whoa, 20,000. Including everyone you knew. Oh, everyone I knew, yes. Not him. He was in the private sector by then.

“Can you imagine all my former colleagues being fired?”

I have neighbors, neighbors that leave beside my house that were fired. In the mid 2000s, Chavez made good on his promise to try to redistribute the oil wealth. He tore up the contracts the foreign companies had with Bedivesa, said they weren't fair. He was a little bit right, but you see the things in what's happening after

he took about decision. For Joseto, everything worked out okay. Because all those formally foreign owned companies. I became the manager of all the nationalized oil companies. 44 companies, yes.

Wow, 44 companies. Which means Jose had a front row seat as foreigners made their slow retreat out of the country. The only major American oil company to stay was Chevron. Under a new contract that gave majority control of the Pativeesa. Meanwhile, Pativeesa was taken over by Chavez loyalists.

Some of whom couldn't tell a pump jack from a nodding donkey. Just kidding, that's the same thing. It took years, but at the end they destroyed it. It lost two-thirds of the production capacity. But at the same time, Pativeesa became bloated.

They hired any enormous number of employees. Like five times that we had in the past, yes. They are only being paid because it's like a political party. So that is the cautionary tale of the Apeltura. If you let foreign investors in, it can be good.

It can revitalize the oil sector. A lot of people can reap the rewards. But beware because things can change. If Venezuelans get the sense that they're being taken advantage of, they might take everything back.

Now, this new Venezuelan oil deal just announced by Trump. It's a weird one, even though the Venezuelan constitution says that oil deposits are owned by the Venezuelan people and can't be transferred to a private company or country, this deal gives the rights to 17 oil fields in Venezuela to a private company, which might be partially owned by the US.

Of course, it's not the best deal.

I would never negotiate that.

But of course not, if they didn't have chance to negotiate, that was imposed. Okay. Yeah. Remember, the US military bomb Venezuelan, removed its former president, put him on an airplane and is holding him at a jail in New York. The current US backed president seems basically at the back and call of the White House, not exactly an negotiation.

But despite all that and despite the climate impacts and how the oil wealth might not be shared equitably, who's hey, things anything to jumpstart Venezuela's oil economy has the potential to be good for Venezuelans. He's not out.

“Wow. Are you going to come out of retirement to do this?”

I can be advising back from getting from the US. I'm not planning to go back to Venezuela. Oh, yeah. Because there's one more thing that happened to Jose and Venezuelan that we haven't told you about yet. Yeah, it might be the most cautionary epilogue to this cautionary tale, especially for any oil execs trying to get in on this team. Here's a little image, a preview. Can you imagine 20 eyes with skeleton mass in rifles?

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We take a hard look at the cost of the program along with U.S. Health Care itself. Find this and hear more stories from the indicator from Planet Money on the NPR app. You know, I don't really think that any oil exec who is thinking to go into business in Venezuela right now has the time to listen to the show. But if you are, you're going to want to hear this part. This story is about just how bad things can get.

When an oil exec gets caught in a geopolitical struggle. In the 2010s, Jose Peraera got a

pretty sweet job. He became president and CEO of SICO, which is an oil company owned by Venezuela

and selling Venezuelan oil, but based in the United States. To remove up the Houston was living the oil executives life. We have all the toys. I flew in helicopters to all over. I have a plane that I could travel all over. But it was a tough situation politically. Jose was a Venezuelan kind of raised in Oklahoma running a Venezuelan oil company in Texas. Yeah, the Americans thought he was just such a beast and even a swell-ins. Well, eventually they

didn't trust him either. And that got worsened 2017 when President Trump and the successor to Chavez Nicholas Maduro really started going at it. Sanctions from Trump harsh words from Maduro. Jose says being stuck in the middle was exhausting. He was ready to call it quits, getting ready to retire. And then just before things giving, he was at the movies with his wife, Justice League, when he got a call. It was Venezuela's petroleum minister. They wanted him to

“come to Caracas to give an update about a refinery project. So what's like a short notice?”

Come tomorrow. Come tomorrow. Tomorrow, yes. So I quit the movie. I told my wife. We see the movie when I come back. Next morning, he and five other executives fly to Caracas. They give their presentation. It goes well. I had the plane waiting for me in the airport. And when I was going to go to the airport, they opened the doors and it came like 20 guard with masks. Skeleton mask. Can you imagine 20 guys? We scaled the masks in rifles. He says they were from Maduro's counterintelligence

unit. The folks who rounded up Maduro's political prisoners. One of them approached him. And said, who is Jose Pereira here? So I said, I'm Jose Pereira. Okay, you had to come with me. And then they, they just, we went to a small room. He came inside a general. And he, he announced that we were accused to be American spies had committed treason to the country. And then we're

“going to go to jail. They put us handcuffed. And the next time I went out to see the sky was”

10 months after. So I stayed in solitary confinement for the next 10 months. 10 months in solitary. He used a treason, corruption and investment. All of which he says he didn't do. The U.S. government agreed. They said he was wrongfully detained. But he was stuck. This is the last snapshot of our story. Jose, alone in a cell. The starkest of contrast with the expense account life he'd been living before. He lost a hundred pounds. Or a hundred pounds. Yes. Yes. You lost a hundred pounds.

A hundred pounds he went here. Yeah. So no diet. Starvy. Oh, yeah. Eventually, he got out of solitary. His family figured out how to get him food. And he was reunited with his sick go colleagues. Oh, wow, my friend. We hug all of us. We begin to cry. He says they kind of saved each other. In detention, they became workout buddies, Bible study buddies, Domino's buddies. It was like when he worked for the Japanese company. Every decision they made they made together and discussed at

great length. Well, let me tell you, we create like a boardroom. No, no, no,

how we will survive eventually. After nearly five years of imprisonment, two cases of

“skabies, two of COVID, a case of bronchitis and a heart attack. Jose, the rest of his sick go colleagues”

and two other prisoners were swapped for two Venezuelans, nephews of then president maduro. Why so good deal? Why so good deal? So that explains why he doesn't want to go back. And why his son who also works in oil for generations says no way. And it might also explain why kick-starting

foreign investment in Venezuela has been so hard for President Trump. Why most of the

big oil companies haven't jumped back into Venezuela so far? Apertura 2.0, it is not exactly

“happening on the best of terms. It is one country that you ask pretty much dictating the terms”

with gunboats and helicopters. Jose and a lot of other people do not want to be in the middle of that. A quick word before we go, we are working on a new bonus episode about a topic we've been asked to tackle a bunch of times over the years, the economics of podcasting. We are pulling back the curtain on NPR plus these sponsor messages you hear or maybe don't hear. The dollars and sense of it all, if you're curious about how any of that works and have a question, drop us an email,

line up money at mpr.org. This episode of Plenemoney was produced by Emma Peasley and Samuel Horses Kessler, it was edited by Marian McEugh. It was fact checked by Emma and Sierra Watts. It was engineered by Josephine Neoni with Help from Jimmy Kealy. Our school mark is Plenemoney's executive producer. Special thanks to longtime Plenemoney producer Willow Rubin, who is currently covering energy for NPR. You got to check out our coverage. It's really great. I'm Nick Fountain.

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