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The first name on the list was Edward Morse. Absolutely definitive within the global zeitgeys if you will, the Washington Consensus on Petroleum, all sorts of efforts here, including his work with the Council unfeign At Relations, and we're honored that doctor Morris would join us in our studio today.
Welcome to Bloomberg, doctor Morris. When I look at this, I think the arch question is a cup of coffee this morning with the President of the United States, how would you brief him on the timeline to get Venezuela to a new Caracas, a new Venezuela.
The timeline is very, very long. The timeline includes not just what must be done on the oils patch, but also includes how do you get this government to cooperate with the United States. And yes, they're starting out on a good foot, but this can't be done without a change in the entire view of the government of how they do what they do. They're there to make money, they're there to control things, and they can't do that and have the oil patch resume what it was like five years ago.
This is a transactional president. You have lived with your iconic work at City Group, a transactional big American banks enjoying losing big money in Latin America and other places. What do you perceive as a relationship of President Trump with mister Diamond, with mister moynihan and with other financiers of America.
Well, he's got a good relationship with the financial sector for all kinds of good reasons that we can get into. That's a separate subject. But here the capital has to come from oil companies. And oil companies look at risk. They look at the risk in the marketplace, what is a supply demand balance, They look at the risks of an investment, And in the case of Venezuela, they need a lot of capital going into infrastructure, and that infrastructure has to be in place before the oil comes out
of the ground. So we're talking here about billions of dollars to start to restore the infrastructure that will get things going, to allow oil on a sustainable basis to rise by a mere four or five hundred thousand barrels a day. That's twenty billion dollars. Twenty billion dollars is not nothing. When oil companies have opportunities in Guyana, opportunities
in Argentina, opportunities in Brazil, and opportunities in Africa. So the question is what will attract companies to spend the capital that Trump needs for the transaction toward.
Paul Chevron debt eleven point seven percent. That's where they are right now.
Just as an example, what do you think the US government or what do you think those energy companies would need from the US government in terms of assurances or whatever to commit that capital.
Do you think, well, they need the re insurance from the Venezuelan side as well as from the US government, because the US government said that it's not taking over Venezuela a good point. So it needs to have the confidence, which will be step by step, and I suspect the first step will be with Chevron to see whether they can make good in short term of capital with short
term return. So I think it's going to be a slow process, but it will be trust building on trust, and we'll see how smooth that transition goes.
Talkos to just describe the energy when we talk about Venezuela, What do they have, what do they need? How big are they is? How important is this? Because I understand there's a lot underground.
It's quite important. So the world is known for a long time that Venezuela has the largest known oil reserves in the world. The problem is it's not the kind of oil that the rest of the world needs or wants. And the problem is it's in Venezuela, and it's complicated oil to get out of the ground. But they've done it before, and they've managed to go from under two million barrels a day to three and a half million barls a day in a relatively short period of time
a couple of decades ago. So if the will is there and the government is there to provide the guarantees, but to do that you need the government institutions to be rewarned. Those government institutions have themselves deteriorated dramatically. They don't have the human resources, they don't have the personnel to be able to guide it. So part of the process will be a return of that human resource base.
Edward Morris with this for a lengthy conversation this morning with Hartree and of course definitive at City Group, among other services to the United States over his long decades on petroleum, on hydrocarbons, I believe I've shared this stage with you and Shannon O'Neil at the Council on Foreign Relations. Doctor O'Neil was on with us recently exceptionally gloomy about Venezuela's ability to reorganize given an event like what we've seen. I assume you've been to us more than forty times.
You remember a Caracus from another time in place. Do you have any optimism that they can move from a Cuba like society to something that can get capitalism done.
Well, you have to be a little bit optimistic given the change that has already taken place. So changing getting Maduro out of that position is a major step. And now the government is in a crisis of survival. That survival will require them to cooperate with the US. So the options that they have are quite limited. Who is going to replace the US at this moment in time, Given the US military position, the naval position surrounding Venezuela, the control that the US has over Venezuela and exports,
it's not easy to imagine a replacement for that. So the good news really is that they are cooperating to start, and we'll see how that goes. But it will be a long road with difficulty.
Is it your understanding, just based upon the limited reporting that we have in the last twelve forty eight hours, that the government of Venzezezuela was in contact with the Trump administration if to facilitate that mister Maduro being taken.
Look, it could not have been done without there being some contact within the government. We know from reporting that the intelligence operations preceded this. They were on the ground, they had to have help to be on the ground, and undoubtedly they were not taken by surprise because of the smooth way events went on over the weekend.
I do think China is viewing what's going on these days.
China's in a big difficult position they have. They are a massive creditor to Venezuela. Venezuela has been part of central to the Belton Road initiative enlarging China's influence in Latin America. Excuse me, and it's been frankly a failure. They have between fifty and one hundred billion of debt. Their operations right now are to export oil to pay for that debt controls their exports out of Venezuela. So they they had, yes, they came down and condemned the
US government. They had to do that, but they have to take a quiet approach because there's so much at stake between them and the US on a global basis, so much at stake on a bilateral basis, including their tariffs, that they want to see some resolution on. So I think we'll see quiet diplomacy with China and the US rather than stamping on the foot or saying anything about military force.
In my reading, i've heard that. But what does Edward Morris, I'm going to butcher the pronunciation, Doctor Morris. Do we need to show the flag this morning and cow Shingport in Taiwan? Does the US Navy need to get over there, and you know, like Perry centuries ago, show the flag time.
I think the US showed the flag before Madua was taken out. They showed the flag with a massive military sale to Taiwan. And the military has been there, the Navy has been there. China is not in a position to fool around with the US, even with much of the US naval fleet now around Venezuela. So I think it's going to be stepping very lightly on what could happen.
Van Morris with his folks a special edition of Bloomberg Surveillance. We've really held back the commercial interruptions to give you this conversation for America. Around the world, you have such a relationship with Faisal and on in Saudi Arabia. How does the Middle East in general, and particularly read and Jedda, how do they respond to these actions?
They're responding quite quietly. Riad Is looking at the global setting. They know that Venezuela could be a threat to the production agreement within OPEK plus, but not in the short run. And the short run they're looking at the year ahead. The year ahead is quite uncertain and quite messy, and it was that way before the taking of Maduro. We have Russia, Ukraine, We have uncertainty on the distortion and
disruption side around the world. And the Saudis have also a military tide of the US that they don't want to lose, right, so they have to and they look at their budget. The budget requires a lot of borrowing. That borrowing may include in their own minds, how low can prices go for US six.
Where's the folks? I failed, Paul, I've failed. Ed Morris nailed the decline in oil. Do you have a lower oil target from her for heart Tree.
So we don't know how low the price will go. It's lifted a little bit by the geopolitical risk. I'd say the supply demand balance, which is higher supply than the race demand now and going forward, is for oil testing branded forty OK and I think testing branded forty is something the Saudis can swallow. How much lower than that they can swallow? It is not known.
I want to get this thing because Paul's got any questions. So you're going to go visit Trump. President Trump is going to mean Edward Morris coffee with the President. You're going to talk about a transactional American president. And I know you're going to get a phone call from Ottawa where Mark Kearney is going to go Edmonton's playing Ottawa, ed Morre's come join me at an Ottawa senator's hockey game. I mean, this is the way it's going to work. What do you say to Mark Kearney of Canada?
Well, start with Trump, because I haven't answered your question by said that Trump. And what I said of Trump is your policy on energy dominance is a wonderful strategy. But mister President, I think you're ignoring some things about
energy dominance, and there are two things about it. One is that you can't get to where you want without having a significant growth, because this is a world transitioning to electricity intensity, and you can't do the electricity intensity you need for AI and cloud computing and energy dominance without renewables. You can't do it even without hydrogen. So you've got to enlarge what you think about energy dominance. And then, mister President, you've got to think about the US.
The US is not one country when it comes to energy. At six. We have two exporting segments in the US. They are the Gulf Coast of the US. And I'm not talking about the Gulf of America or the Gulf of Mexico, but the Gulf Coast, and we have Alaska, both exporters of fossil fuels. And then we have two massive importers of fossil fuel with no tie. And mister President,
here is a lesson. The reason that we have two importers on the West Coast and the East Coast that are massive in scale, global in scale is because another period of dominance around World War One, we thought we were the best shipbuilding company country in the world, and we wanted to retain that dominance. So the Jones Act was enacted. And the Jones Act has meant that when it comes to energy, we are importers because we can't afford American chips to take oil from the Gulf Coast
to the West Coast or the East coast. We need investors and they carry far.
So this is the moment to do away with a Jones Act.
This is the moment to do it, I mean, and also to tell the president energy dominance a good idea needs a little bit of massaging at the edge.
I mean, the photograph of Theodore Roosevelt with the map of Venezuela behind him from I believe Paul nineteen oh nine was just stunning. I mean, this history going back here, Paul Sweeney with Edward Morris.
So when you go down to Houston, you talk to these big energy companies today. Are they happy with what's going on in the last twenty four or forty eight hours or are they apprehensive? Did they see a big opportunity here?
They see a better opportunity that they've seen than they've seen in years, but they are apprehensive. The risk of putting capital, their capital, their shareholders. Capital at risk looms extremely large in their minds, so there's not going to be a rush to put money into Venezuela until we see what the structure of the investment might look like.
I'm surprised.
I don't see a move in WTI and Brent Crew today.
Now I couldn't have told you is it gonna be up five percent or down five percent? But I kind of got nothing going on here today.
Well, in my prepared remarks, I thought that was the first question. I didn't know. You know that we're going to have prices go down a.
Little bits and surveillance, you know, we make it up as.
We're winging it. No, I'm not surprised. Okay, there is no change in the energy market period.
There you go, all right, so, but I think at some point it just feels like almost Opeck and Opeck plus become less and less relevant every day.
Opek and Outpeck plus have become less relevant every day since the beginning of this decade. And when we look at the positions that have put this in place, it's not just the rise of Guyana and Brazil and Argentina again, but it really is the US. The US h you know, I have this battle with my colleagues at work almost every day. The US is not just a crude oil producer. It is a massive liquids producer. We are a producer of twenty three twenty four million barrels a day, and
our growth has been in natural gas liquids. Natural gas liquids compete with oil out of a refinery. They compete with gasoline, they compete with dissolate, they compete with fuel oil. They're there for transportation, they're there for home heating and power generation and industrial use. So we are the disruptor of the global market, and we're the ones who put OPEC plus in a position of defense.
I would be out. We're going to have to wrap it up here with Mark Champion coming up, folks from Europe, with all of his decades of experience, Doctor Morris. Some of the highlights of my career here than with you in with Daniel Jurgen. If I was to get Urgen in Morse together and look at his theprize, just the romance that I as a kid in college, red cover to cover. We got to find the romance for Venezuela, to save a society, to say a region maybe to
support the don Road doctrine. I don't know how do we get the romance back that you knew working there, that I knew as a student.
I don't know how we do that. I know that I'm not going to bring the romance back, and Dan Jurgen certainly has the ability to do it. By the way, I was an early reader of the Prize. He and I knew each other in graduate school. We were in different graduate schools, And when he wrote The Price, the original version that I read was actually twice as long as a version in print, So he had to cut out a lot of wonderful text in order to put out that brilliant book.
The book was it, Paul? It was You had to walk around even if you didn't read it, you walked walk it. Yeah, to be cool, You're gonna talked about this unique American relationship with various and sundry Banana republics, Reagan and Granada and the rest. Can we develop a new process with Central and Latin America or will this be the same old, same way through the rest of the Trump term.
No, I think there is a process going on. If we look at elections that have taken place in Latin America. There's a rebellion in those countries against corruption. There's a move from the corrupt left to the right. We've had a corrupt right in the past, but it's been a very constructive set of moves from reelections. So I think I think Latin America is in a very good position now,
better position than it's been in a long time. And part of it is the lessons learned from China, overspending and having a view that all credit has to be repaid.
Wow, Paul, we got to get to mark Champion. But doctor Morris, I got to bring this up, Paul said, you got to ask the question time. What's it mean for Landman?
Thank you very much for inviting me. It has been a pleasure to.
Be Thank you so much. With har Tree and of course doctor Morris was City Group for many years, Edward Morrice there