Venezuela-US oil deal faces hurdles: economist warns of need for clear rules, legal security

Economist Asdrúbal Oliveros views the recently announced oil agreement between Venezuela and the United States as a significant opportunity for the South American nation. However, he cautioned that the deal's success hinges on Venezuela's ability to guarantee stable conditions, legal security, and a competitive fiscal regime capable of attracting the investment needed to revive its crucial oil industry.

Oliveros acknowledged the agreement's magnitude, noting that Venezuela requires substantial capital, technology, and capable companies to reactivate its oil sector. He pointed out that the U.S., due to economic, geographic, and historical factors, is poised to play a vital role in this process. "The United States is called upon to play an important role," he stated, emphasizing the potential for a "very positive" energy alliance.

However, the economist tempered optimism with a dose of realism. He stressed that announcing multi-billion dollar investments is distinct from their actual materialization. "We are talking about investments that need years to mature and, therefore, require something that Venezuela has had difficulty offering: clear and predictable rules over time. Legal security, contracts that are respected, arbitration mechanisms, and an institutional framework that does not depend on who governs in Caracas or Washington," he explained.

Furthermore, Oliveros highlighted the importance of a competitive fiscal regime. He warned that an excessively high tax burden could render projects unviable, even if they appear attractive on paper. "With the level of risk that Venezuela still represents, attempting too high a tax burden can end up making projects unviable that on paper look very attractive," he noted.

Concluding his assessment, Oliveros urged a balanced perspective, avoiding both premature celebration and automatic rejection. He believes the key lies in the execution: "The truly important thing will be to see under what rules it will be done, who will provide the capital, how the investment will be protected, and what the fiscal regime will be."