Following the ousting of Nicolas Maduro, Chevron has been much more amenable towards investment in Venezuela, though recently they have been advocating for more legal reforms to ensure profits. The current Venezuelan government is focused on mining legislation, and therefore hasn’t yet considered additional oil legislation, which has subsequently given some companies like Chevron cold feet. The large American oil companies would like to see reduced taxes, Venezuelan laws which mirror American ones, and the prospect for international arbitration of contracts. To ensure their demands are met, companies like Chevron have been extensively lobbying both the American and Venezuelan governments and several visits from oil CEOs have outlined potential areas for growth.
Whilst both countries and companies benefit from greater cooperation, there should also be a deal of uncertainty amongst Venezuelan oil companies and amongst the citizenry as to how affected they will be by such large direct foreign investment. If done correctly, a fair share of the revenue could be sent back to the people and raise living standards whilst also giving Venezuela a break that it badly needs to expand into other sectors. On the other hand, if American companies are allowed free reign and held back by blanket promises, then it’s hard to claim that Venezuelans will benefit from the deals being made behind closed doors.
A particularly odd stakeholder is the PDVSA – Venezuela’s national oil company – who has been working extensively with American companies, such as Chevron, to lobby for new oil legislation. They should theoretically be in competition with American oil companies, yet haven’t the means to fully produce their own supply, so they’re left in a pseudo-state whereby profits are only assured by whatever equipment can be scavenged. Ms. Rodriguez must also be feeling pressure from Washington, that she will comply with new American plans for the country, but if Venezuela goes off on a tangent and stands again alone, would we have the backbone to go in twice?
The terms of international arbitration are intriguing, namely because Venezuela has a terrible track record with international arguments. Their eastern border with Guyana has been continually argued over, and rare is the win in an international court. Nonetheless, the step towards international arbitration is a safer bet for oil companies than relying on Venezuela, as companies with large foreign companies exploiting their resources have a general track record of relieving those companies of their deposits.
