Venezuela: The truth below

Sep 1, 2012

No matter the outcome of October’s elections, Venezuela’s next leader will face growing pressure for private capital to boost the oil sector

By Girish Gupta As Venezuelan bond yields ebb and flow with the health saga of president Hugo Chávez, who faces his toughest election yet on October 7, foreign investors are once again starting to take a closer look at the country’s oil supplies, the largest in the world. They are hoping either for a change of government or perhaps a wave of pragmatism from Chávez. This appears to be in the offing with the recent announcement of a $2 billion financing deal between Chevron and state oil firm Petróleos de Venezuela (PDVSA). Chevron will lend the company the money at Libor plus 4.5% over 20 years for their Petroboscan joint venture. The California-based multinational appears to have placed a bet on Chávez’s continued presidency of Venezuela and has so far avoided the expropriations that have blighted operations by competitors such as ExxonMobil and ConocoPhillips. Chávez in turn appears uncharacteristically to...

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