A Chavez-less Venezuela should worry Alberta
As Natural Resources Minister Joe Oliver and Alberta Premier Alison Redford exhaled after the EU rejected – for now – its proposed fuel quality directive, I wonder if they have been paying attention to Venezuelan politics lately.
If they haven’t, they should, because the smell of a regime change is in the air in Hugo Chavez land. As The Oil and The Glory’s (and occasional Alberta Oil freelancer) Steve LeVine wrote this week, the Venezuelan president is in trouble, both health-wise and politically.
As global oil and gas observers are aware, the populist Chavez has made a bit of a mess of the once-proud Venezuelan oil and gas sector during his 13 years in power. But he might not be in power for much longer. Opponents of Chavez have mobilized to support presidential candidate Henrique Capriles and Chavezista’s are so worried they have started a smear campaign against the upstart contender.
But what does Venezuelan politics have to do with Alberta and the oil and gas industry? Plenty. Venezuela has lots of oil, but Chavez’s erratic behavior and socialist policies have made the once-prolific petroleum industry inefficient and unproductive. Chavez is also xenophobic when it comes to allowing foreign oil companies to operate in his country. As a result, the place has become a “no go” zone for foreign firms.
However, that could change dramatically if the supposedly free market-leaning Capriles defeated Chavez in an election.
And if Capriles can get his country’s act together when it comes to oil and gas production, Venezuela has a lot of oil, particularly heavy oil, that could flood the market and attract foreign investment at the expense of Alberta’s oil sands.
As one Venezuelan expert who I occasionally exchange emails with wrote recently:
Canadian companies should be paying attention to Venezuela. It is a potential threat to their efforts to reach the Gulf of Mexico (in addition to the Obama administration’s doubts about the Keystone pipeline) and, of course, a potential lucrative market for heavy oil technology.