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-Short Attention Span Theater-

Erik Prince's drive to build a private airforce.

2018-06-01

[TheIntercept] ON A CRISP SATURDAY in November 2014, a black Mercedes SUV pulled onto the tarmac of an Austrian specialty aviation company 30 miles south of Vienna. Employees of the firm, Airborne Technologies, which specialized in designing and equipping small aircraft with wireless surveillance platforms, had been ordered to work that weekend because one of the company’s investors was scheduled to inspect their latest project. For four months, Airborne’s team had worked nearly nonstop to modify an American-made Thrush 510G crop duster to the exact specifications of an unnamed client. Everything about the project was cloaked in secrecy. The company’s executives would refer to the client only as “Echo Papa,” and instructed employees to use code words to discuss certain modifications made to the plane. Now the employees would learn that Echo Papa also owned more than a quarter of their company. A fit, handsome man with blond hair and blue eyes got out of the Mercedes and entered Airborne’s hanger. Echo Papa, who was often just called EP, shook hands with a dozen Airborne employees and looked over the plane. “He was the sun, and all the management were planets rotating around him,” said one person present that day. One of the mechanics soon recognized Echo Papa from news photos — he was Erik Prince, founder of the private security firm Blackwater. Several of the Airborne staff whispered among themselves, astonished that they had been working for America’s best-known mercenary. The secrecy and strange modification requests of the past four months began to make sense. In addition to surveillance and laser-targeting equipment, Airborne had outfitted the plane with bulletproof cockpit windows, an armored engine block, anti-explosive mesh for the fuel tank, and specialized wiring that could control rockets and bombs. The company also installed pods for mounting two high-powered 23 mm machine guns. By this point, the engineers and mechanics were concerned that they had broken several Austrian laws but were advised that everything would be fine as long as they all kept the secret. Prince congratulated everyone for making the plane “rugged” and then left. The plane was due in South Sudan, where it was urgently needed to salvage Prince’s first official contract with his new company, Frontier Services Group. Prince was eager to get the Thrush 510G in the air. Over a two-year period, Prince exploited front companies and cutouts, hidden corporate ownership, a meeting with Russian arms dealer Viktor Bout’s weapons supplier, and at least one civil war in an effort to manufacture and ultimately sell his customized armed counterinsurgency aircraft. If he succeeded, Prince would possess two prototypes that would lay the foundation for a low-cost, high-powered air force capable of generating healthy profits while fulfilling his dream of privatized warfare. In early 2014, Prince and Citic Group, China’s largest state-owned investment firm, founded Frontier Services Group, a publicly traded logistics and aviation company based in Hong Kong. FSG offered services such as shipping minerals, chartering flights for executives, and occasional medevacs from remote African locations. Over the past two years, Prince has given interviews and speeches describing his vision of FSG. “This is not a patriotic endeavor of ours,” Prince said of his new company. “We’re here to build a great business and make some money doing it.” China, he said, “has the appetite to take frontier risk, that expeditionary risk of going to those less-certain, less-normal markets and figuring out how to make it happen.” But while he burnished his new image as chairman of a public company, he was secretly overseeing the clandestine attack aircraft program. In 2013, when FSG was being created, Prince and his team were already developing a secret blueprint for weaponized crop dusters to target terrorists and assist counterinsurgency operations in Africa. Lots more at the title link. Head there.

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Caribbean-Latin America

Venezuelan oil a risky investment for China

2012-03-14

BUENOS AIRES — China has poured billions of dollars into Venezuela's oil sector to expand its claim over the country's massive oil reserves. But Beijing is getting relatively little for its investments, and Chinese officials are increasingly frustrated with Venezuelan President Hugo Chavez, according to energy analysts and former managers of the state oil company, Petroleum of Venezuela, or PDVSA as it's known by its Spanish acronym. Sucks to do business with incompetent communists, eh Mr. Ho? Mr. Chavez, who is battling a life-threatening recurrence of cancer, said his goal is to send 1 million barrels of oil a day to China, which has given Venezuela more than $30 billion in loans and promised billions of dollars more in energy investments by 2016. PDVSA claims to send 410,000 barrels a day to Chinese markets, the bulk of which is used to pay back the loans. Already this year, PDVSA has announced that Citic Group Corp., China's largest state-owned investment company, will acquire a 10 percent stake in the Petropiar heavy-crude project held with PDVSA and U.S.-based Chevron Corp. It also said that the China Development Bank will spend $4 billion to help boost production in a joint venture with China National Petroleum Corp., or CNPC. The Chinese bank and the Venezuelan government also have agreed to renew a $6 billion bilateral investment fund, of which $2 billion will help boost PDVSA production. But Tom O'Donnell, an oil analyst who teaches at the New School University and writes an oil-industry blog, the Global Barrel, said the payoffs of China's loans amount to a "consolation prize." He said China's goal is not to get oil for loans, but to have its own national oil companies contract for major oil-production projects in Venezuela's Orinoco Tar Sands, the largest single known petroleum reserve in the world, with 513 billion barrels of heavy crude oil. "The Chinese have not gotten the kind of preferential access they want [to the tar sands], and my sources tell me they are extremely unhappy," said Mr. O'Donnell. In 2010, CNPC signed a deal to help Venezuela develop a major Orinoco oil field known as Junin 4, which includes the construction of a facility to convert heavy oil to a lighter crude that could be shipped to a refinery in Guangdong, China. "Although the contract was signed in December 2010, not one barrel of oil has yet been produced, much less upgraded," said Gustavo Coronel, a former PDVSA board member. But don't worry, Hugo's spent the money... "So far, nothing much seems to be happening, except for the arrival of a large group of Chinese staff to the CNPC's Caracas office," he added, referring to the Venezuelan capital, Caracas. "Apart from money, there seems to be little that China can offer Venezuela in the oil industry," he said, adding that a "culture gap will make working with China very difficult for Venezuelan oil people, who were mostly trained in the U.S." Plus China doesn't have the technical know-how, so all they have are hands and cash. Erica Downs, a former energy analyst for the Central Intelligence Agency now with the Brookings Institution in Washington, said the Junin-4 project could be key to China's future in Venezuela. "If all that happens, China will be in a position to take substantial volumes of Venezuelan oil," she said. "The problem is that the project hasn't gotten off the ground." Ms. Downs said Venezuela is far from living up to Mr. Chavez's export goals for Beijing and that PDVSA's claims of sending 410,000 barrels a day do not match Chinese customs data, which show 322,000 barrels per day of crude and fuel oil imported from Venezuela last year. "Although Venezuela's oil exports to China have grown along with the volume of oil-backed loans extended by China Development Bank to Caracas, the delivered volumes still fall short of Chavez's goal of eventually shipping 1 million barrels per day to China," she said. Critics of the loans say Mr. Chavez is using the so-called "China fund" as his personal piggy bank. The Chinese also seem to be increasingly wary. Internal PDVSA documents released by a Venezuelan congressman show that the Chinese balked at a $110 billion loan request by Mr. Chavez in 2010, after PDVSA officials failed to account fully for where the money would go. The Chinese are now pressing PDVSA to let them list some of their investments in the Orinoco region on the Hong Kong exchange, a move analysts say would increase transparency and accountability in PDVSA's spending. "Development of the Orinoco oil belt is only slowly taking place because most of the companies — excluding Chevron, Repsol and China National Offshore Oil Corp. — either do not have the cash or the technology," said Oliver L. Campbell, a former finance coordinator at PDVSA. Unlike light and sweet crude from Saudi Arabia, oil from Orinoco is tarlike. It is laced with metals and sits beneath deep jungles. Getting to the oil field means building roads, electrical-power grids and other major infrastructure. Once the oil is extracted from the ground, it is technically difficult to process. "One of the major problems is that there are very few refineries outside the Gulf of Mexico that can handle Venezuelan crude," said Jorge Pinon, a former president of Amoco Oil Latin America. Years ago, U.S. companies such as Shell and Exxon invested heavily in U.S. Gulf Coast refineries capable of processing heavy crude after they saw that the world's supplies of sweet crude were diminishing, Mr. Pinon said. "The Chinese don't have that kind of capacity," he said. But they are looking to get it by investing in oil infrastructure off Venezuela's Caribbean coast. CNPC, for example, has extended a line of credit to Cuba to upgrade a Soviet-built facility jointly owned by Venezuela and Cuba. The company PetroChina also has taken over Saudi Aramco's lease on a massive oil-storage facility at the strategically located Statia terminal on the Dutch Caribbean island of St. Eustatius. PetroChina also has tried to buy an oil refinery on the island of Aruba owned by Texas-based Valero Energy Corp., according to news reports. Luis Giusti, a former president of PDVSA, said the Chinese market becomes even more relevant for Venezuela in the face of a projected resurgence of domestic production in the United States, which currently buys about 45 percent of all Venezuelan crude exports. "The U.S. Energy Information Agency has estimated that the U.S. could reach a production of 20 million barrels per day by 2035, coming from shale oil in North Dakota, Arkansas, Oklahoma, Montana and others," he said in an email. "This would force exports from South America to look for other markets."

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