Challenges to investment
Venezuela’s oil industry has been state-controlled for two decades, since the government expropriated assets of foreign companies including US giants Exxon Mobil and ConocoPhillips.
Chevron is the only US major that retained continuous operations in the country, as a partner of state energy company PDVSA.
However, a sweeping reform approved in Venezuela last week is set to grant autonomy for foreign oil producers, while lowering taxes and encouraging fresh investment.
While some companies have expressed significant interest in developing Venezuela’s crude reserves, believed to be the largest in the world, top CEOs have warned they would need to see strong legal frameworks and a stable political environment before making decisions about any long-term projects.
Venezuela’s current oil output of less than one million barrels per day is down sharply from a peak of about three million bpd after decades of oilfield neglect, mismanagement, underinvestment and sanctions.
Oilfield service companies, meanwhile, have been clamouring for licences to use key drilling equipment already in the country and to bring in rigs and specialised gear – moves that are seen as a crucial first step to revitalising output. US firms SLB, Baker Hughes and Weatherford have existing licences that do not allow rig operation or expansion.
