US oil companies may have reservations about investing in Venezuela, analyst sayspublished at 00:27 GMT
00:27 GMT
Ahmed Adan
US president Donald Trump has said he wants American oil companies to invest in Venezuela’s oil industry.
Political and energy analyst José Chalhoub – formerly an analyst at the state-owned Venezuelan oil and gas company PDVSA – told the BBC’s Business Daily podcast that he doubts US oil companies will want to return and invest again in the South American country.
“You have to create an entirely different system, an entirely different political system, for the US companies, because […] these types of companies are averse to taking risks,” Chalhoub says.
He adds that US companies will be considering what happened to companies like Hallypargin, Shrumager, Exxon, and Conoco, “that were subjected to the expropriation of assets by the former government of Hugo Chavez”.
Chavez, who was in power from 1999 to his death in 2013, changed the laws around foreign companies investing in Venezuela’s oil industry and required them to invest in the state-owned PDVSA. Companies that did not agree had their assets seized but were then compensated following international arbitration.
Chalhoub also argues that Venezuelan people “would not care who owns” the oil companies, as long as economic conditions in the country improve.
He is, however, sceptical about the short-term changes to Venezuela.
“There’s still uncertainty about what’s going to happen in the next days, weeks or months,” he says, adding it depends on how Trump is “going to negotiate with the current government.”
To improve the oil production and export, a huge reform is needed, Chalhoub adds.
You can listen to the full episode.