Chavez’s Death Shakes Up the Oil Sector

Venezuelan’s President Hugo Chavez’s death, on Tuesday 5th March 2013, caused a moderate impact on crude oil prices but opened huge uncertainty over the future of the oil industry in the country.

During Chavez’s 14 years government, Venezuela’s oil production declined despite that Venezuela sits on 297 billion barrels of oil reserves and is the world’s fourth largest OPEC producer, after Saudi Arabia, Iraq, and Kuwait.

The Oil and Gas Journal reported that ‘although Chavez relied heavily on the country’s oil income to fund social programs, Venezuela’s crude exports fell to 1.7 million b/d in 2011 from 3 million b/d in 2000 because little was reinvested in exploration and development. But even under the best conditions, it will take a long time to revive Venezuela’s oil industry, said industry experts.’

On one side during Chavez’s government, many US oil companies such as Exxon-Mobil and Conoco-Phillips had to interrupt production activities and were expelled from the country, on the other Russia’s companies such as Lukoil, Gazprom and Rosfnet had several cooperation and partnerships with the country’s state-oil firm, Petroleum of Venezuela. Russia hopes that all the agreements reached with Chavez will remain valid. The US hopes that a new energy policy will be adapted.

The presidential election to choose Chavez’s successor will be held in 30 days. Will Venezuela’s energy policies change? Will Chavez’s death open a new era for Venezuela’s oil sector?

Let us know by commenting below.

Alternatively if you’d like to learn more about the future of the oil industry, why not attend our event, the World National Oil Companies Congress in London.

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