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🇻🇪 Venezuela /Energy & Infrastructure

José Toro Hardy: Venezuela’s oil reserves may be overstated

From El Nacional · () Spanish

Translated from Spanish and summarized by DistantNews. Read the original for the full story.

At a glance

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  • Economist and former PDVSA executive José Toro Hardy says Venezuela’s oil reserves may be overstated and questions the capacity of smaller companies involved in a proposed deal.
  • He says major producers such as ExxonMobil and ConocoPhillips avoided investing because Venezuela changed contracts, expropriated assets and failed to pay arbitration awards.
  • Toro Hardy argues that elections, an elected government, separation of powers and protection for contracts and private property should have preceded a new oil agreement with the United States.

José Toro Hardy says Venezuela may be relying on intermediaries to attract investment into 17 oil fields, even though the country’s reserves could be overstated and the companies involved may lack the money needed to develop them.

The economist and former PDVSA executive believes major oil companies’ refusal to invest, because of Venezuela’s political and judicial insecurity, helped lead U.S. President Donald Trump to accept concessions for a company led by Alejandro Betancourt. The fields are said to contain about 65 billion barrels in reserves. “I have no doubt that this is the reason,” Toro Hardy told El Nacional.

I have no doubt that this is the reason.

· José Toro HardyHe attributed the U.S. decision to accept the proposed concession arrangement to major oil companies’ reluctance to invest in Venezuela.

He said Venezuela needed investment to recover its oil industry, but argued that investment should take place under a legitimate government with a clear separation of powers. In his view, ExxonMobil and ConocoPhillips would have been better placed to lead the recovery, yet both companies considered Venezuela too risky after earlier experiences there.

The reason the big companies are not entering Venezuela is that country risk is very high and they have had very bad experiences in Venezuela in the past.

· José Toro HardyHe explained why companies such as ExxonMobil and ConocoPhillips have avoided new investment.

Toro Hardy recalled that the companies were first nationalized, later signed major contracts and invested under the oil opening, then saw contract terms changed and their assets expropriated. They won international arbitration cases, he said, but were not paid. A JPMorgan assessment, he added, ranks Venezuela as the world’s riskiest country for investors.

He said the risks should have been addressed through elections, a legitimately elected government, respect for contracts and private property, and removal of the possibility of expropriation. A possible U.S. government guarantee for the investors could change the picture, Toro Hardy said, but he acknowledged that there are not enough precise details to determine how the arrangement would work.

We should have started by eliminating or controlling those risks so that companies would come to invest.

· José Toro HardyHe argued that political and institutional reforms should have preceded the oil agreement.
About this summary

Originally published by El Nacional in Spanish. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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