• 5 minutes 'No - Deal Brexit' vs 'Operation Fear' Globalist Pushback ... Impact to World Economies and Oil
  • 8 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 12 minutes Will Uncle Sam Step Up and Cut Production
  • 8 hours Maybe 8 to 10 "good" years left in oil industry * UAE model for Economic Deversification * Others spent oil billions on funding terrorism, wars, suppressing dissidents, building nukes * Too late now
  • 4 hours OPEC will consider all options. What options do they have ?
  • 31 mins Recession Jitters Are Rising. Is There Reason To Worry?
  • 14 hours Russia Accuses U.S. Of Stoking Tensions With Missile Test
  • 5 hours What to tell my students
  • 5 hours CLIMATE PANIC! ELEVENTY!!! "250,000 people die a year due to the climate crisis"
  • 18 hours With Global Warming Greenland is Prime Real Estate
  • 6 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 9 hours TRUMP'S FORMER 'CHRISTIAN LIAISON' SAYS DEEPWATER HORIZON DISASTER WAS GOD'S PUNISHMENT FOR OBAMA ISRAEL DIVISION
  • 1 hour Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 1 day In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 21 hours Get First Access To The Oilprice App!
  • 10 hours Flaring is at Record Highs in Texas

VENEZUELA: Lurching Towards Political Chaos and Recession

Bottom Line: Amid two major oil deals, Venezuela is lurching towards political chaos with the state oil company’s debts rivaling those of the federal government and socio-economic and political unrest threatening to spiral out of control.

Analysis: Within the last two weeks, two major foreign investors signed multi-billion dollar deals with Venezuela. On 27 May, Chevron agreed to pony up $2 billion to increase production under joint management in the Boscan field off the coast of Zulia state. China National Petroleum Corp. (CNPC) is finalizing an agreement to loan Venezuela $4 billion to purchase the necessary equipment to sustain and expand oil production under the flag of bi-national Sinovensa in the Orinoco Belt. Yet political unrest and economic pressures are mounting. State oil company Pdvsa’s debt rivals that of Venezuela’s federal government.

Shortages of many staples are causing the government to clamp down even harder; on 5 June they announced a pilot program to prevent shoppers from buying more than a fixed number of certain key goods using microchips, even if they go to more than one store. Meanwhile, annual inflation is now over 25%, and most economic forecasters think Caracas is headed for a recession. As people become more desperate, newly elected President Nicolas Maduro’s position becomes more precarious.

Venezuelan Politics

Cracks have started appearing among the chavistas; a recent audio recording detailed alleged machinations by President of the National Congress Diosdado Cabello to manipulate the military against Maduro, and possibly even orchestrate a coup d’etat. Whether the money, the military or the masses in the street are his undoing, it seems likely that Maduro will face challenges to his power beyond opposition rival Henrique Capriles. That political chaos is likely to be accompanied by massive insecurity, including looting, road blocks and violence.

Recommendation: Though their historic relationships with the Venezuelan bureaucracy and years of experience working in a high-risk environment may partially insulate Chevron and CNPC’s off-shore operations, any investor who is not already deeply entrenched in Venezuela should avoid starting new projects there.




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play