CARACAS – Venezuela could need at least a decade and tens of billions of dollars in investment to rebuild its oil industry to something approaching its former scale, according to ConocoPhillips Chief Economist Helen Currie.
Currie made the assessment Tuesday during the Annual Energy Summit organized by Rice University’s Baker Institute in Houston, where energy executives, policymakers and specialists gathered to discuss global energy investment and geopolitical risks.
She said Venezuela faces a long road if it wants to regain the production volumes and importance it once held in the global oil industry.
But attracting the large-scale investment required for such a recovery will depend on more than Venezuela’s enormous petroleum reserves.
Currie pointed to stability, reasonable fiscal terms and a durable legal framework as essential conditions for encouraging Western oil companies to commit substantial capital to the country. She said the recovery process cannot fully begin until investors have confidence in a stable and transparent fiscal regime and legal system.
Her estimate does not mean Venezuelan oil production cannot increase during the next decade. Instead, the timeframe refers to the much larger challenge of restoring the industry to levels approaching those Venezuela achieved when it was a significantly larger global producer.
The assessment comes as international energy companies are again exploring opportunities in Venezuela. Baker Hughes announced agreements this week involving Venezuelan state oil company PDVSA and other partners to expand natural gas infrastructure, while Shell has indicated that it sees opportunities particularly in Venezuela’s gas sector.
However, rebuilding the industry also requires major improvements to supporting infrastructure. Energy executives recently identified Venezuela’s unreliable electricity system as an obstacle to expanding oil and gas production, with significant investment needed to rehabilitate the power grid.
Currie’s assessment underscores the difference between possessing large petroleum resources and having the infrastructure, financing and investment environment necessary to extract and commercialize them on a sustained basis.
For Venezuela, increasing production would therefore represent only one part of a broader reconstruction of an industry that would require sustained investment over many years.