On the world scene, oil remains one of the most traded energy resources. Although many countries have opted for the manufacture of the raw material to commercialize its derivatives in a faster and more profitable way. In the case of Venezuela, the little technological investment so far has not allowed other products to consolidate in the market, but extra heavy oil and its stable blends have remained in constant sale, despite the U.S. sanctions. That is why in one of the countries with the largest oil reserves in the world, today it is a risky emerging market but with many future projections. Based on this premise, in this article we will reflect on whether it is possible to establish a foreign oil company in Venezuela.
Exploration opportunities in Latin America
The diversification of the oil market and its derivatives has meant that countries that previously did not extract their own oil have now managed to extract and import oil for manufacturing. Thus, countries such as Argentina and Brazil have succeeded in significantly increasing oil extraction and processingThe company is the leader in the Latin American fossil fuels market.
In the case of Venezuela, domestic oil companies have been able to stabilize their sales due to the extra-heavy oil blends that facilitate its exploitation. China is one of the main technological ports where Venezuelan oil can be manufactured quickly and profitably. This makes them one of the main buyers of the product, leaving behind the United States, which has opted for technological development, like Brazil, to achieve energy independence.
Infrastructure investment and commercialization of extra heavy oil in Venezuela
On the other hand, the fact that Venezuela has lagged behind in the technological development of the industry should not be taken as a calamity. In fact, it can be an investment opportunity with long-term profitability. The acquisition of wells, fields and other infrastructure can be profitable if this technology is taken advantage of and modernized according to new needs.
In the case of the commercialization of extra heavy oil, it would be necessary to invest in mechanisms to distill and produce other types of elements, such as gas, chemicals and other oil derivatives. The profitability of this industry depends on the willingness and readiness of companies to manufacture other products. So the investment opportunities do not seem to be in extraction but in the production of other resources.
Penalties and special licenses
In the case of US sanctions, the Venezuelan government seems to resort to other alternatives and resumes the system of private concessions and foreign money. Iranian and Chinese private companies have seemed to align themselves to the partial agreements for the extraction and production of fuels at national and international level. Without being legally affected by these obstacles.
On the other hand, some U.S. companies that had special trading licenses with Venezuela, managed to sell their assets in the territory due to the uncertainty of the sanctions. In this case, a team of experts can identify legal ways to operate in the Venezuelan oil industry without being affected nationally and internationally. While we understand that the risks inherent to the Venezuelan economy and politics are present, they can be reduced by operating, importing or exporting products. So it is feasible to establish an oil company in the country if you have a broader vision of the market. Given that with a good legal advice it is possible to establish commercial connections with companies already established within the Venezuelan oil industry.
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