Venezuela and Maduro's Oil Mirage

 

For any observer of what is happening in oil-rich Venezuela, reading the news on the subject in the global business press is sometimes laughable. The dynamics are simple. The oil companies involved in the Venezuelan oil quagmire and the news agencies are forced to sell a reality that does not exist. The former so as not to frighten their shareholders. The latter because their correspondents need to be paid for news from that country. Maduro's regime, not at all condescending to the free press, releases some data and scoops to correspondents in exchange for a friendly view of the regime. In the end, a deception is constantly generated around the oil industry in Venezuela.

What is the reality?

PDVSA is a shambles inside. It is not reliable. It is undermined by criminal networks. It has some managers who are trying to do things right, but the networks of Chavismo, that is, Maduro and his allies, are not only creating chaos, but brutal plunder in all areas of activity. This is not an opinion. It is a fact.

The oil companies that are inside know it and continue because they have to collect some debts or because of the negligence of their managers. Chevron, Repsol and ENI make some profit, but they are always in danger of losing a lot. The situation is so serious that neither China nor Russia, and not because of sanctions, dare to help with investments. Only agreements under the table and with little effect.

Venezuela's oil future is negative. There was no exploration and development for many years before the sanctions. There is no investment in the maintenance of the development infrastructure. That is why it is ridiculous for Colombia to say that it is dependent on the supply of gas from Venezuela or that Biden needs this oil.

If at this moment they would lift the sanctions. All the sanctions. Venezuela would not recover its production potential because there will be no investment conditions and the most important reason is the inability of Maduro and his team to operate an oil field decently.

What to expect from oil-producing Venezuela?

If they tell you that the United States or Europe think that Venezuelan oil is the justification for lifting the sanctions, you can start laughing because that oil will not be available in the medium term for the reasons explained above. Only with democracy and economic freedom will that oil and gas have a future. Chavismo has dismantled the oil industry to such an extent that it cannot even aspire to the level of Iran or Russia, also sanctioned and at war, but with their respective industries exporting as if they were not sanctioned or at war.

For Venezuela's oil to play a starring role, tens of billions of dollars of investment will be needed as part of a massive opening of the oil industry to private capital and the rebirth of another PDVSA. That is not going to happen with Maduro. You can be sure of that. It can only happen in democracy and freedom.



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