Many put the decline down to Hugo Chavez being elected president in 1998, at which time he immediately increased state control of the oil industry. Chavez's questionable energy policies have led to a scenario whereby heavy domestic oil subsidies have driven domestic oil consumption up from 36 percent to 47 percent of the total energy mix in the last decade, reducing the amount of oil the country can to sell into the global market, according to OilPrice.
There is also concern as to whether Russian firms will be able to maintain a foothold within a market that has seen international oil companies such as ExxonMobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) face expropriation when they declined to give PDVSA majority control of their Venezuelan projects.
Will presidential health concerns affect progress?
Ramirez was recently forced to deny rumors that foreign companies are holding off on investments in oil projects due to the uncertainty surrounding Hugo Chavez's long-term health after the president remained in Cuba after undergoing his latest cancer surgery.When asked by a journalist about Rosneft's expectations considering Chavez's complicated health situation, Sechin told Reuters that he hopes the company's projects with PDVSA will continue based on plans for "long-term cooperation." "We're going to continue this work," Sechin said, adding that the company also plans to work with Venezuela in areas including electricity, infrastructure and the production of oil drills and other equipment. Other Russian oil companies operating in Venezuela include LUKOIL (MCX:LKOH) and Gazprom (MCX:GAZP). Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article. Related reading: What Hugo Chavez's Illness Means for Venezuelan Mining Venezuela and China Team Up to Develop Major Gold Mine Russia Makes Inroads in Venezuelan Energy Sector from Oil Investing News