Who controls Venezuela’s oil? What does Maduro’s arrest mean for energy markets?
The overthrow of Venezuelan President Nicolas Maduro has put the spotlight back on one of the world’s most sensitive oil production spots, forcing investors to reassess who controls the country’s crude oil resources, and whether they can be revived after decades of decline.
Who controls Venezuela’s oil?
says Andy Lippo, president of Venezuelan President Nicolas Maduro. "Lipo Oil Associates": "Venezuela’s state oil company (PDVSA) controls most of the country’s oil reserves and production stages. A company operates "Chevron" US energy is in the country through its own production and a joint venture with the National Oil Company, while Russian and Chinese companies are also involved through other partnerships."
Saul Kavonek, Head of the Energyin a company "MST Financial" If a government is formed in Venezuela and is more inclined to invest and work with the United States, Chevron will be the most willing to expand its role, adding that European companies such as Repsol and Eni could also benefit, given their current locations in Venezuela.
What does this mean for the global oil market?
Experts at The oil sector warns that any change in the regime may disrupt the supply chain that ensures the continued flow of Venezuelan oil.
Lipo said: "Since it is currently unclear who is in charge in Venezuela, we may see exports come to a complete halt, as buyers do not know to whom to send money"
He added that the latest round of US sanctions had severely affected exports, forcing Caracas to reduce production.
On the other hand, other analysts downplayed the possibility that global supplies would be affected by the halt in production in Venezuela, which has modest production to begin with, describing the immediate impact as "Almost non-existent"
The importance of Venezuelan crude
The importance of Venezuela in the long term lies in the quality of the oil it produces. Extracting heavy crude oil in the country may be technically difficult, but it is desirable for complex refineries, especially in the United States.
Libo says that if a new government is formed led by the opposition leader, Maria Corina Machado Soon, sanctions may be eased and oil exports may initially rise as stored oil is used to generate revenue. However, he added that a short-term rise could put pressure on prices.
A comeback could take years
Analysts say any talk of a sustainable recovery of oil production in Venezuela will face tough practical constraints. The Venezuelan oil industry is in a state of severe decline, to the point that even with a change of government, it is unlikely to see any significant increase in oil production for years, given the need for huge investments to rehabilitate existing infrastructure.
Oil company officials explained that restructuring the sector would cost at least $10 billion annually, with a stipulation "Stable security environment" As a basic condition.
- For more: Follow Khaleejion 24 Arabic, Khaleejion 24 English, Khaleejion 24 Live, and for social media follow us on Facebook and Twitter
