After Hugo Ch?vez, what's next for Venezuelan oil?

With Hugo Ch?vez's passing, some are looking for a new era in Venezuelan oil. But Venezuela's role in the global oil market has diminished over the years and some expect little change in Venezuelan oil after Hugo Ch?vez.

By David J. Unger,?Correspondent / March 7, 2013

A city cleaner walks past a mural that spells the last name of Venezuela's late President Hugo Ch?vez in Panama City, Wednesday. Mismanagement plagued Venezuela's state-owned oil company under Ch?vez's reign, stifling production and scaring off investors.

Arnulfo Franco/AP

Enlarge

Hugo Ch?vez's passing offers new promise for developing the world's largest?oil reserves, but most?analysts expect that change will come slowly, if at all.

Skip to next paragraph

Recent posts

' + google_ads[0].line2 + '
' + google_ads[0].line3 + '

'; } else if (google_ads.length > 1) { ad_unit += ''; } } document.getElementById("ad_unit").innerHTML += ad_unit; google_adnum += google_ads.length; return; } var google_adnum = 0; google_ad_client = "pub-6743622525202572"; google_ad_output = 'js'; google_max_num_ads = '1'; google_feedback = "on"; google_ad_type = "text"; google_adtest = "on"; google_image_size = '230x105'; google_skip = '0'; // -->

Subscribe Today to the Monitor

Click Here for your FREE 30 DAYS of
The Christian Science Monitor
Weekly Digital Edition

Production at the state-owned oil company Petr?leos de Venezuela SA (PDVSA)?dropped by a quarter under Mr. Ch?vez, and some speculate the Venezuelan leader's passing will usher in an era of stability for the country's national oil company.

"The oil industry has been waiting patiently for Chavez to die with the hope that whoever came next would be more interested in building value rather than destroying it," notes Forbes.

The potential value is enormous. Venezuela's?Orinoco Belt holds the world's second largest reserve of tar sands (also known as oil sands) after Canada. Adding in its conventional oil, Venezuela has?296.5 billion barrels of oil reserves, the largest in the world, according to BP's 2012 Statistical Review of World Energy. No. 2 Saudi Arabia has?265.4 billion barrels in reserve.

Venezuela plans eventually to produce an additional 2 million barrels per day courtesy of more than $80 billion in investments.?

But mismanagement plagued PDVSA during Ch?vez's reign, stifling production. And nationalization of the oil industry and other political moves scared off many foreign investors. Oil giants like?Exxon Mobil Corp. and ConocoPhillips left the country. Others won for contracts but were hesitant to put in the large investments neces, but Ch?vez's passing may once again catch the attention of the oil supermajors.

?[PDVSA] really is disrespected today because of corruption, cronyism, incompetence and it?s just doing a terrible job for the people of Venezuela,? John Hofmeister, former president of Royal Dutch Shell's US unit, told Bloomberg Wednesday. ?They?ve got a long way to come back. Let?s hope they can come back, because otherwise it?s gonna get worse before it gets better.?

Despite being the?fourth-largest oil exporter to the United States, Venezuela's role in the global oil market has diminished over the years. The boom in tight oil production from shale may soften the impact of any price uncertainty associated with the end of the Ch?vez era.

"Venezuela is a weak OPEC hawk, as it has no sufficient production to influence prices," Gustavo Coronel, a founding member of the board of state-oil firm PDVSA, told CNBC Tuesday. "Venezuela is no longer a factor that can really upset the markets as was the case 20 years ago."

Source: http://rss.csmonitor.com/~r/feeds/csm/~3/uOzrQcCrpTk/After-Hugo-Chavez-what-s-next-for-Venezuelan-oil

creutzfeldt jakob disease the lone ranger yu darvish mad cow pennsylvania primary jerome simpson hand sanitizer