Ve Venezuelan oil sector Loading... : Investor Sentiment and Bull/Bear Views

There is tremendous interest in Venezuela's resources, several companies are already on the ground and will ramp up investments immediately, $100 billion of investment over 10 years is achievable, and massive increases in investment are coming to Venezuela's oil and gas industry.

Although Maduro has been removed and the U.S. administration sees Delcy Rodriguez as a technocrat it can work with, the Venezuelan regime remains intact and the government is unstable and internally fractured. Investing in Venezuela's oil sector still carries very high risk: U.S. capital inflows would require rule of law, contract enforcement, resolution of international arbitration cases, a new hydrocarbons framework, and eventually free and fair elections. Under the current framework, investors would be minority stakeholders to PDVSA, so the risk-reward remains unattractive until these reforms materialize.

Oil executives believe Venezuela could return to 3.5 million barrels per day by 2030 if stability and security are restored on the ground, though that would require substantial investment. She also points to Venezuela's 2020 anti-blockade law, which allows the executive branch to enter deals and pursue full privatizations and removes the old requirement for at least 51%-60% state ownership, giving acting President Delcy Rodriguez leeway to work with oil companies if she cooperates with the US.

Delcy Rodríguez is a pragmatist within Chavismo who has assembled professional economic and legal advisers and, as vice president, increased Venezuelan oil production even under the harshest U.S. sanctions. Her operating record makes her uniquely suited to manage Venezuela's economy and oil sector on the international stage. The business community that can cooperate with American companies is likely the local families who stayed and ran Venezuelan companies, not diaspora returnees. This supports a constructive view on investing in Venezuela and its oil sector despite the messy transition.