Reform Efforts Likely Too Little, Too Late
BMI View: While the government has recently announced a number of reforms in the wake of Venezuela's December 8 municipal elections, we continue to maintain a cautious view on the outlook for the Latin American country's hydrocarbon sector. Indeed, while these measures may have some benefit, without more substantial, structural changes the country will continue to produce well below its potential.
We have long held a cautious stance on both the Venezuelan oil and gas sector as well as the financial position of state-owned firm Petróleos de Venezuela (PdVSA), noting that chronic underinvestment and misappropriation of funds have weighed heavily on the company's upstream and downstream segments. While the government has recently announced a number of reforms, following the strong showing by the ruling Partido Socialista Unido de Venezuela (PSUV) in the December 8th municipal elections, for now we remain unconvinced these will be sufficient to put the sector on the right track.
Sicad No Long-Term Solution
|Ruling Party Rules Elections|
|Venezuela - Preliminary Election Results, Popular Vote, %|