Venezuelan state oil company PDVSA needs 58 billion to revive its crude production levels before ex-President Hugo Chavez came to power. Before ex-president Hugo Chavez came to power, they produced around 3.4 million barrels a day. The company was seeking capital investment from Venezuelan and foreign partners. PDVSA advertised in their new partnership model document the use of product services agreements (ASPs). The deal states, contractors would finance 100 percent of operations in the oilfields and in return would receive a portion of the project’s free cash flow as payment. The crisis-stricken South American nation produced just 578,000 barrels per day in march. Washington imposed sanctions against PDVSA in a bid to depose Maduro, whom it brands a dictator. In total, PDVSA identified a total of 152 “opportunities” requiring $77.6 billion in investment. Venezuela is home to some of the largest reserves on Earth, but because of the underinvestment, those reserves are incapable of being harvested.
The under investment in the oil industry in South America is alarming to me. Countries are fighting over the rights to oil fields in the Arctic which is very difficult to drill in, so the question is why aren’t they fighting to get the oil in Venezuela if there is a sufficient supply of it. The amount of money that is needed to revive this company is a large lump sum. It almost is enough that a government or some large wealthy individuals will need to fund the operation. For the region, it is affecting the flow of economy throughout and is creating a shortage in jobs. The reason for the under investment is because of the leaders within the country, ex-president Charez is the reason that this is happening.
From a levels of analysis perspective we can see an affect on an individual level because people are losing money and are out of jobs. On a state level, the country is lacking monetary and has a large oil reserve with no means of getting the oil out. On a region level, surrounding countries might need the oil for their needs. On an international level, countries throughout the world are in need of this oil supplies and without it in years to come when their oil fields dry up they’ll be fighting for Venezuela’s supply.