Recently published research from Business Monitor International, "Venezuela Oil & Gas Report Q4 2013", is now available at Fast Market Research

Boston, MA -- (SBWire) -- 09/24/2013 --BMI View: In the wake of the political transition following the death of long-time leader Hugo Chavez, a weaker than expected current President Nicolas Maduro is confronting a worsening economy and growing unpopularity. While a flurry of new loans and deals may improve the financial position of PdVSA over the short term, the threat that badly needed funds will diverted from investment into the oil and gas sector to fund social programmes remains as real as ever. Although our long-term forecasts call for growth as projects in the Orinoco belt ramp up, we expect Venezuela to continue its underperformance given the scale of challenges - which range from political interference to chronic underinvestment. Similarly, despite abundant gas reserves, we expect Venezuela to remain a small net importer of gas over the course of our forecast period.

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The key trends and developments in Venezuela's oil & gas sector are:

- We continue to hold a conservative outlook for Venezuelan oil production, seeing more downside risk than upside in the near term in the absence of a wider overhaul of the sector. With production flat in 2012 at around 2.5mn barrels per day (b/d), we expect output to rise slightly to 2.6mn b/d by 2014, driven mostly by new projects in the Orinoco belt. in 2013 to date, the major agencies report a production range between 2.2mn b/d and 2.5mn b/d.
- In the medium term, we expect output to remain below the stated output goal of 3.0mn b/d until the end of the decade, when we expect gains in production to accelerate as planned and proposed developments in the Orinoco belt come online. Our conservative forecast assumes delays and problems that have been a hallmark of the country's oil sector.
- There is some scope for improvement over the near-to-medium term. PdVSA reported over recent months a flurry of loans and credit deals, which will see nearly US$11bn pumped into the troubled firm to support upstream development. This could allow for some long-stalled projects in the Orinoco Belt to advance.
- However, the risk remains strong that, as in the past, funds intended to support the chronically underfunded oil and gas sector could be diverted to support additional social expenditure as part of an effort to offer support for a government whose popularity is waning. While our core view is for no major liberalisation in the oil sector, we could see pressure for reform growth should the economic and social crisis in Venezuela further deteriorate.

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