Venezuela-based private equity firm Sucre Energy Group expects reforms aimed at attracting foreign investment to Venezuela's capital-starved oil and gas industry to make the local energy market work for companies that have bet on the country holding the world's largest oil reserves.
Last month, Sucre Energy bought the 70-percent stake of Japan's Inpex in Gas Guarico, a natural gas joint venture with Venezuela's state oil firm PDVSA.
"We have the belief that the state is going to put in place the public policy required for this market to work," Nicolas Faillace, a director at Sucre, told Reuters in an interview published on Friday.
"That will give the proper incentive for the payments to happen," the manager told Reuters.
Nicolas Maduro has signaled that Venezuela is working on legislation aimed at attracting more foreign capital, after major international oil firms abandoned Venezuelan operations due to the U.S. sanctions and PDVSA's dire financial situation, which prevents it from paying joint venture partners and contractors.
Earlier this month, reports suggested that China National Petroleum Corporation (CNPC) was preparing to return to Venezuela after the Maduro government finalizes the legislation.
Venezuela's oil industry has crumbled in recent years due to the domestic crisis and the American sanctions. The U.S. 'maximum pressure' campaign on Maduro's sources of income-oil being the primary such source-began to cripple Venezuelan oil exports in early 2019. At the same time, the lack of investment in the oil industry, years of mismanagement and corruption, and the hyperinflation in Venezuela compounded the problems for the oil sector in the country sitting atop the world's largest crude oil reserves. The pandemic further crippled economic activity in the South American country.
Despite the sanctions and despite the severe crisis which became even more severe with the pandemic and plunge in oil prices last year, Venezuela claims it can quadruple its crude oil production and put an end to the incessant lines at all gas stations in the country.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More