How Venezuela's oil industry has changed since Maduro's capture

It’s been a little over three months since the capture of Venezuelan President Nicolás Maduro by the United States. He's still being held in New York. But back in Venezuela, there is some movement on the revitalization of the country's oil industry. And it comes at a time when the global oil market is very volatile.

For more, “Marketplace Morning Report” host Sabri Ben-Achour spoke with Francisco Monaldi, director of the Latin America Energy Program at Rice University’s Baker Institute for Public Policy.

Sabri Ben-Achour: What has changed in Venezuela's oil industry since the capture of Maduro?

Francisco Monaldi: A lot of things. I mean, the first one is that Venezuela used to be exporting most of its oil, about 80%, to the black market in China, before the U.S. blockade in December. Today, Venezuela is exporting everything to licensed markets by the U.S. — mostly to the U.S., India, and some to a storage in the Caribbean. And all the money is being collected in a U.S. Treasury account that then some of it goes back to Venezuela. And companies are coming back to the country to see business opportunities there.

Ben-Achour: What is the arrangement exactly? Like, is the U.S. skimming profits off of Venezuelan oil, or is it just controlling where that oil goes? What is the deal?

Monaldi: I mean, there is a lot of opacity in how this is being managed. But the bottom line is that we don't know exactly how much money is being collected, at what price the oil is being sold, and how in the future, this money is going to go back to Venezuela.

Ben-Achour: Chevron is moving ahead with new agreements to expand oil projects in Venezuela. How sure can oil companies be that Venezuela is stable enough for them to invest in?

Monaldi: I think we have to distinguish — Chevron produces 25% of Venezuela's oil. Also, they are an incumbent company. They are just expanding their footprint. There are a couple of other companies that have a similar situation. But the rest are companies that would have to figure out how to go back to the country to sign new deals, etc. And I think that will take some time to figure out the details for these companies to really make significant investments in the country.

Ben-Achour: Global oil supply chains are being rerouted, as we speak, by the U.S. and Israel's war with Iran. Does Venezuela plug a hole in that? What is Venezuela's role?

Monaldi: Venezuela is so far adding very little additional barrels to the world market. It is sending some oil to U.S. refiners that really want this sort of heavy oil. And also, President Trump has allowed India to buy a significant amount of Venezuelan oil. Remember that the Indians were told not to buy Russian oil, and then, of course, you had the crisis in Hormuz. And that means that India is having difficulty finding the imported oil that they need. And so, Venezuela is helping with that. But as I mentioned, in the end, the issue is: is Venezuela going to add significant number of barrels in the next few years that helps to diversify the world oil supply? And that is a question mark still.