Venezuela Oil Spending May Extend Decline Under Maduro, IEA Says

Venezuela’s investment in oil exploration and production may extend a long-term decline if President Hugo Chavez’s “anointed successor” is elected, according to the International Energy Agency.

Crude output from Venezuela, the fourth-largest oil producer in the Organization of Petroleum Exporting Countries, fell 22 percent in the 14 years since the election of Chavez, who died March 5, according to figures in today’s monthly report from the Paris-based IEA. A victory by Vice President Nicolas Maduro, Chavez’s handpicked successor, may continue the policy of using profits from state-owned oil company Petroleos de Venezuela SA to fund social welfare projects, the IEA said.

“A Maduro presidency could see a further degradation of the state oil company and the country’s oil prospects,” the agency said in in the report. “PDVSA has long been the cash cow that fueled President Chavez’s expensive social programs to the detriment of investment in the country’s oil sector.”

Venezuela’s daily crude production was 2.5 million barrels in 2012, down by 700,000 barrels from when Chavez was elected in 1998, the IEA said.

The nation will hold a special presidential election on April 14. South America’s largest oil producer will continue to use the industry’s profits to feed and house the poor, Oil Minister Rafael Ramirez said on state TV this month.

“The post-Chavez transition to a new leadership could prove raucous, but oil production operations are expected to remain unaffected with Energy Minister Rafael Ramirez remaining at the helm of the oil sector,” according to the IEA report.

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