Does Russia Have Anything to Fear from Chavez's Failing Health?

Incident: Russia makes moves to deepen its energy cooperation with Venezuela, with Rosneft announcing a planned $10 billion investment in offshore oil and natural projects and the creation of a joint venture to purchase Russian oil drills. In total the two sides plan to invest $47 billion over the next six years. Other Russian companies will invest an estimated $7 billion in these same projects, and Rosneft expects a second investment phase to see it contribute an additional $16 billion.

Bottom Line: This deal, according to Venezuela's energy minister, should boost production from the state oil company to 1.12 million barrels per day by 2021. This series of massive new joint deals cements Russia's role in Venezuela's oil industry, and this is not likely to be challenged by Chavez's ailing health.

Analysis: The Western media is rife with speculation that Russia must be worried about President Chavez's ailing health and that if he dies Russia's deals could be threatened. We do not believe this is any significant cause for concern in Moscow, nor should it be. Certainly, the Russian delegation that visited Caracas recently to put the pen to paper on these deals is concerned about Chavez's health and what would come after him, but Rosneft would not risk an investment of this size without a certain amount of insurance. Even if Chávez becomes too ill to rule, power would likely be transferred at this stage to his chosen successor, Nicolás Maduro. Russia's significant investment is very likely to boost production and fill state coffers to enable it to better deal with any potential socio-economic unrest.