Pumping units stand in an oil field in Lagunillas, near Lake Maracaibo, Venezuela, on May 24, 2018. Foreign investors are pledging billions to revive Venezuela’s aging oil industry, but ordinary Venezuelans will benefit only if the investment boom becomes a bridge to democracy. (Shutterstock/JBula_62)

Foreign Investment Is Pouring into Venezuela. Will Democracy Follow?

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Oil, gas, and mining deals could revive Venezuela’s economy, but inflation, instability, and an uncertain democratic transition could squander the windfall.

Venezuela is attracting a potentially enormous wave of foreign investment commitments. Reuters, Financial Times, and others covered several of these this month, but we have tallied them up to provide a comprehensive picture. We also provide the regional and strategic context to understand where these new developments might be headed. 

This historic potential investment surge already includes energy, mining, and infrastructure projects. 

How Much Foreign Investment Is Flowing into Venezuela

As we published two weeks ago, the largest proposal is from North American Blue Energy Partners (NABEP), anticipated to explore $100 billion across 17 oil fields. NABEP claims the 100-year lease could produce more than one million barrels per day, in turn generating royalties and taxes for the Venezuelan government. 

Chevron, which already operates in Venezuela, separately announced plans to expand its operations with a $7 billion investment over the next five years. This would double its production in the country to 600,000 barrels per day. American giant ExxonMobil is reported to be nearing an agreement with Petróleos de Venezuela, S.A. (PDVSA) to also explore undeveloped oil fields, with the details currently undisclosed. 

Italian company Eni received a 25-year contract through PDVSA to operate the Junín-5 field, containing an estimated 35 billion barrels. Similarly, Continental Resources signed a memorandum of understanding with PDVSA to develop the Ayacucho 2 oil block in the Orinoco oil belt. Florida-based Denarius Holding Group plans a $400 million phased investment in the CEMA Oil Field over 20 years. French company TotalEnergies signed an agreement with interim President Delcy Rodríguez on an undisclosed oil deal. Meanwhile, Halliburton signed an agreement with Brazil’s Eneva and Venezuela’s WESCA to develop energy opportunities for an undisclosed figure. BP has teamed up with United Arab Emirates’ XRG and Qatar’s UCC to explore the Loran gas field, containing an estimated 7.3 trillion cubic feet of gas. 

There are possibilities beyond hydrocarbons for foreign investment. In April, Venezuela changed its mining law to allow foreign concessions of up to 30 years. Subsequently, Heeney Capital and Mercuria announced a $1 billion gold-mining arrangement. In September, GE Vernova agreed with PDVSA and Corpoelec to stabilize the country’s electrical grid within 12 months and expand the current power supply by 33 percent in four years. Negotiations are also ongoing on infrastructure improvements in ports, airports, housing, water, and roads. Untapped potential for foreign investment in tourism, agriculture, and livestock provides additional possibilities for economic growth.

The headlines signal a sea change for Venezuela’s economy and could help restore basic governance functions in a failed state. However, the future of Venezuela remains uncertain. Left-wing actors across the region have condemned US intervention as foreign exploitation, providing a platform for potential resistance. Even if the deals produce an economic windfall, it will take years for Venezuela to rebuild its economy and address systemic unemployment. An August Congressional Research Service report raises concerns about the lack of transparency surrounding Venezuela’s oil revenue. In July, the Financial Times reported that the United States........

© The National Interest