Venezuela's oil future depends on political stability, experts say

Economic experts believe Venezuela's oil sector recovery, particularly after the U.S. opened the door to foreign investment, will largely depend on the nation's political stability. They argue that without strong institutions and a clear political future, investors will be hesitant to commit to long-term projects in sectors like oil and mining, which require decades to mature.

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nobody is going to invest in the medium or long term in a country that "does not show" signs of solid institutions and political stability, which, he affirmed, represents a "guarantee that agreements, contracts, and new arrangements will be sustained."

Luis Zambrano Sequín, an economist at the Catholic University Andrés Bello (UCAB), emphasized that political stability is a "guarantee that agreements, contracts, and new arrangements will be sustained." He noted that without societal consensus on fundamental political elements, significant risks in sectors like oil and mining are unlikely to be assumed by investors.

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If there is no conviction that there are political agreements on fundamental elements that are shared by society as a whole, then obviously, in the case of investments in sectors such as oil or mining, where projects mature over decades, no one will assume considerable risks.

The interim government, led by Delcy Rodríguez, has been strategically opening up sectors such as oil, mining, and electricity to international investment. This initiative is supported by the ruling party-controlled parliament. Simultaneously, the government is undertaking reforms, including cabinet reshuffles, military leadership changes, and the release of political prisoners, as the U.S. facilitates negotiations between the current parliament and the opposition-controlled 2015 parliament to expedite the transition.

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political stability "becomes a key element" in this context, as does the relationship between Venezuela and the U.S., about which, he asserted, there is also no clarity.

Economist María Antonia Moreno, also from UCAB, echoed the sentiment that investment hinges on political stability and credibility from both the state and companies. She stressed the need for enhanced technical and political training for public officials to safeguard national interests in contracts. Sociologist Blas Regnault added that resolving the "accumulated governance crisis" in the oil sector and ensuring legal security and transparency are prerequisites for the sector to drive economic reconstruction.

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the arrival of more investments depends "to a large extent" on political stability, in addition to credibility from both the Venezuelan state and the companies.