Venezuelan oil future speculation continues as Caracas remains quiet

Chavez will be succeeded by Vice President Nicolas Maduro in the interim period until a constitutionally-mandated election can be held within 30 days.

The oil industry has felt little direct effect from the death of Venezuelan leader Hugo Chavez, but speculation about possible changes in the country’s production and export industries continue. Chavez died Tuesday from complications from Cancer. He will be succeeded by Vice President Nicolas Maduro in the interim period until a constitutionally-mandated election can be held within 30 days. At that time, Maduro is expected to overcome likely challenger Henrique Capriles and secure the Presidency.

Maduro is a Chavez loyalist who was hand-picked by the late leader. Although considered an approachable pragmatist, especially compared to Chavez, Maduro’s rhetoric and actions in the wake of the former leader’s death suggest he plans to continue on his mentor’s path. Already, 2 US diplomats, Air Force officers, have been ousted from the country. They have been accused of possibly formulating a military plot, an accusation staunchly denied by Washington.

Maduro’s likely ascension to the Presidency means a probable continuation of the policies Venezuela has followed for the last 14 years. Although production and export efforts are expected to increase, those expectations stem from the surprisingly low numbers the country has permitted for the last ten years, and not from possible changes in policy.

Production in Venezuela has dropped significantly during Chavez’s time in office. The country sits on the largest reserves in the world, but production dropped 20-25%, with exports seeing a similar drop. Caracas has also been accused of inflating production numbers, suggesting an even greater drop. Exports also saw a major decline during Chavez tenure. Exports fell from 3 million barrels per day in 2000 to 1.7 million barrels per day in 2011.

During his time in office, Chavez nationalized the country’s oil industry, PDVSA, and ordered American companies like ExxonMobil out of the country. PDVSA took over any projects left behind, but it is uncertain whether work was continued. PDVSA funds were used to adopt other projects, including finance and housing, during Chavez’s tenure. These projects helped establish Chavez as a hero to some, a fighter for the poor and disenfranchised. However, siphoning funds for those projects is also blamed for the decline of the country’s oil efforts.

During his presidency, Chavez made multiple changes to the country’s constitution, the same constitution guiding the politic in the election process in the days ahead. It is unknown how closely Maduro and other high-ranking government officials will follow that guide, but the new election is reportedly expected in April or May. A more solid idea of the country’s future, and specifically it’s oil future, is likely to come even sooner.

Maduro is a Chavez loyalist who was hand-picked by the late leader.

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