Reuters Investigates

Venezuela’s embarrassment of riches — oil

Today’s special report, “Pension fund scandal shakes up Venezuelan oil giant,” examines state oil company PDVSA and the problems it has exploiting what are said by OPEC to be the world’s largest known reserves of crude oil.

At the heart of the latest scandal is a Connecticut hedge fund manager named Francisco Illarramendi who has pleaded guilty to multiple counts of wire fraud, securities and investment advisor fraud. Prosecutors say he ran a Ponzi scheme that lost up to half a billion dollars, most of it money that had been entrusted to Illarramendi by PDVSA’s pension fund.

Check out this interactive graphic which shows how Venezuela has taken the top spot in terms of world oil reserves.

This one shows how despite rising estimates of the country’s reserves, PDVSA’s production has actually declined in the decade since Chavez came to power.

Nuclear power in scary places

Today’s special report “After Japan, what’s the next nuclear weak link?” takes a look at developing countries’ plans for nuclear power. Read the story in PDF format here.

Andrew Neff of IHS Global Insight sums up the issue in this section:

If in a modern, stable democracy, there could be apparently lax regulatory oversight, failure of infrastructure, and a slow response to a crisis from authorities, then it begs the question of how others would handle a similar situation. 

“If Japan can’t cope with the implications of a disaster like this,” said Andrew Neff, a senior energy analyst at economic analysis and market intelligence group IHS Global Insight, “then in some ways I think it’s a legitimate exercise to question whether other less-developed countries could cope.”

The nuclear power industry is booming, with countries like China, Russia and India leading the way in building new plants, as this graphic shows:

Of course, Three Mile Island and Fukishima show that having a developed economy and democracy is no guarantee of safety in the nuclear field, but the prospect of nuclear technology in the hands of corrupt or authoritarian governments has some experts worried.

Have you driven an F3 lately?

By Ben Berkowitz

Diplomats, consultants and analysts have plenty of questions about Chinese car maker BYD and its growth tactics, but there’s one thing no one can question: BYD shares have made a lot of people a lot of money in recent years.

Since Warren Buffett invested in the company at the depths of the financial crisis in September 2008, BYD shares are up nearly 300 percent. (And that’s after a sharp decline over the last 16 months, as the company delayed its American debut and experienced sliding sales domestically). Compare that with Ford, up about 170 percent over the same period – and Toyota, which has lost more than a fifth of its value. At one point, BYD shares were so strong that its chairman, Wang Chuanfu, was China’s richest man.

See our special report “Warren Buffett’s China car deal could backfire” for more on BYD, or read it in multimedia PDF format here.

The hurricane guessing game

Unpredictable weather is making life difficult for insurers — see today’s special report: ”Extreme weather batters the insurance industry.”

By Ben Berkowitz

Every year forecasters at Colorado State University take their most educated guess as to how the next year’s hurricane season will unfold. It always draws headlines, but as history shows, that initial “best guess” is usually somewhat far off the mark.

An analysis of 10 years of first forecasts for the subsequent June-November storm season shows the number of tropical storms generally exceeds expectations, sometimes by a fair bit. As you go up the scale to full-blown hurricanes and on to the more intense “major hurricanes,” the disconnect remains the same.

In 2006, for example, the number of major hurricanes matched the predicted number of all hurricanes, period. In 2010 the number of hurricanes was greater than the expected incidence of all tropical storms. (In fact 2010 is considered by experts to have been a relatively heavy storm year, despite the fact none actually made a crucial U.S. landfall).

Though the predictions have a mixed track record, they serve a useful planning purpose. If insurers, governments and coast-dwellers have a reasonable guess as to what a storm season is going to look like generally, they can plan ahead. In hurricane country, planning ahead is often the only thing that separates inconvenience from disaster.

Oil under ice

BP’s Macondo Gulf spill would be nothing compared to the effect of a drilling accident in the Arctic, Jessica Bachman reports from “the foulest place in all of Russia.”  Scientists and Russian officials are just starting to wake up to the fact that “if something happens on the Arctic Barents Sea in November it would be, ‘OK, we’ll come back for you in March,’” Jessica says.

But quite what Russia would do about that is not at all clear. The Russian government gets more than 50 percent of its revenues from oil and gas and Prime Minister Putin’s stated aim is to keep producing more than 10 billion barrels a day through 2020. Environmentalists aren’t the only ones who are worried.