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US Oil Revival in Venezuela Faces Hurdles
5 Jan
Summary
- US firms require political stability before investing in Venezuela.
- Venezuela's oil sector capacity has been significantly diminished.
- Indian companies have minimal exposure but trapped dividends.
US oil companies are poised to encounter substantial challenges in revitalizing Venezuela's oil sector, even with President Trump's stated intention for significant investment. Executives caution that a decade of depleted institutional capacity and the forced departure of American firms in the mid-2000s necessitate a period of political stability before billions can be committed.
Regaining control over the local administrative machinery and overcoming entrenched bureaucratic interests will be critical. Without a credible authority to manage contracts, international companies, accountable to shareholders, are unlikely to risk substantial capital. For India, any regime change offers limited immediate opportunities, with recovery of dues depending on future production stabilization.
While a lifting of US sanctions could benefit Indian refiners by allowing access to Venezuelan crude, most international oil majors exited the country over a decade ago. Companies that previously sold assets at a loss are expected to proceed with extreme caution, prioritizing durable political stability and legal certainty.
