Gregg Laskoski is a senior petroleum analyst for GasBuddy.com
With the passing of Hugo Chavez questions about Venezuela's future multiply each day. Who will lead this nation? Nicolas Maduro or Henrique Capriles, an underdog who garnered 44 percent worth of opposition votes when he ran against Chavez?
Will Chavez's successor move left, right or center? Will the newly elected leader encourage rapid recovery of Venezuela's declining oil production? Will he yield to international law and allow oil companies like ExxonMobil and Conoco Phillips to recover billions in compensation for the unlawful seizure of assets … perhaps signaling an interest in welcoming private oil investment and further development of Venezuela's deep reserves?
For now, ExxonMobil still has its arbitration case pending against Venezuela before the World Bank-affiliated International Center for Settlement of Investment Disputes. ExxonMobil spokesman David Eglinton said this week that "the larger International Center for Settlement of Investment Disputes arbitration against the government of Venezuela remains. The dispute is not over Venezuela's power to expropriate; the dispute is over Venezuela's failure to meet its obligation under applicable international law to pay compensation based on fair market value of the expropriated investment. We have no indication of when the ICSID decision will be given."
Many remain uncertain. One oil industry veteran, Terri Ignozzi-Little, of Merlin Petroleum, Westport, Conn., says that "if the government remains the same, it will be as much of a disaster as it has been for the last 16 years. Chavez did his best to undermine the efficiency over the past decades and cause tremendous disruptions in supply." She said Venezuela may not see discernible change until after Castro dies in Cuba. "Remember, Venezuela holds the cards for crude oil which is supplying the rest of Latin America and Argentina, which is getting natural gas supplies from them."
The International Center for Settlement of Investment Disputes lists 17 pending cases against Venezuela involving companies like ExxonMobil, pursuing billions of dollars in compensation from the oil nationalization effort which unlawfully seized private assets.
And despite their experience they may be willing to return to the fray, undoubtedly beguiled by the potential. They know that Venezuela's 297 billion barrels of oil reserves can correct a lot of mistakes. One-third of that oil is heavy crude and commercially viable only when crude oil is selling at $70 per barrel or higher. Either way, that's the largest inventory in the world, 32 billion barrels more than Saudi Arabia claims, according to OPEC's 2012 Statistical Bulletin.
That Venezuela, to date, has squandered much of its opportunity in the global oil boom is indisputable. Will its leader find the apolitical footing needed to foster sustainable progress and production increases? Or, will he feel compelled to lean on the anti-"imperialism" crutch of his predecessor and settle for inertia?