How is Venezuela’s Crisis Changing Caribbean Oil Ties?
Venezuelan oil output has dropped nearly 50 percent over the past three years, according to data compiled by Bloomberg, and an ongoing economic crisis and fresh U.S. sanctions threaten further declines. Meanwhile, Guyana’s output is expected to reach 750,000 barrels a day by 2025, according to ExxonMobil estimates, and could surpass Venezuela’s if trends continue. How might the collapse of Venezuela’s oil industry affect Caribbean countries, which have benefited from Venezuela’s oil largesse in the past and where several of Venezuelan state oil company PDVSA’s assets are located? To what extent may it change economic ties and political alliances in the region, including Petrocaribe? How likely is it that other countries such as Guyana will step in to fill any void?
Daniel Erikson, managing director at Blue Star Strategies: “Over the past 20 years, Venezuela, under Hugo Chávez and then Nicolás Maduro, built a strong bastion of support in the Caribbean, using discounted oil and related investments through Petrocaribe to gain loyalty—or at least silence—from many energy-dependent Caribbean countries. With the collapse of the Venezuelan oil industry and the continued decline in exports, though, the countries of the region—both those in and out of Petrocaribe—have begun to seek out alternative energy arrangements. Meanwhile, Caribbean support for Maduro has begun to decline as countries such as Jamaica, the Dominican Republic and St. Lucia withdrew their support for Venezuela at the Organization of American States. Meanwhile, Mexican state oil company Pemex appears ready to increase its market share in the region. However, Venezuela’s return to political stability, if it happens, will not be a panacea for Venezuela’s oil industry. The country’s energy infrastructure has been decimated, and thousands of knowledgeable workers have fled to neighboring countries. It will take years for Venezuela to…”Read More
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