Now that Chavez has run Venezuela’s oil production into the ground and needs a new cash infusion for his social programs, he is inviting oil companies back in to make investments:
CARACAS (Reuters) – Less than a year after Venezuelan President Hugo Chavez launched a nationalization crusade, the OPEC nation is boosting efforts to bring in private oil investment amid growing energy-sector problems.
State oil company PDVSA may be seeking to stem growing cash flow and operational problems, only months after a wave of nationalizations that drove out two of the world’s biggest energy companies.
I don’t know about you, but he seems a trustworthy sort. I would invest a few billion there.
With heavy contributions to Chavez’s social development crusade draining PDVSA of much-needed investment, the warming to the private sector may signal a call for help.
Market observers say Venezuela’s output is around 25 percent below official production figures of 3.2 million barrels per day, while exports to the United States of refined products tumbled last year amid chronic refinery outages.
This should surprise nobody.
A rapprochement with the private sector will be difficult unless PDVSA pays up debts to partners, offers them more operational control over projects and convinces them their investments will be safe despite repeated contract violations.
Yes, I think those asset seizures are about to come home to roost. The question is, will anyone be willing to invest major dollars there now? I would hardly think so.