Political chaos and troubled times in Venezuela's oil patch are posing problems for a number of international oil companies, according to a recent report in Barron’s.

The story notes that Venezuela has some 300 billion barrels of proven oil reserves, but it cites Credit Suisse analysts who write that the country’s oil production has fallen by more than half to just over 2 million barrels from 3.3 million barrels in 2004.

And of course the slide in crude prices over the past few years is expected to weigh on production and profits in the South American country. (see also: Venezuela: 4 Reasons Why This Country May Go Under).

Plus there’s the threat of broader sanctions on Venezuela (see also: Oil Prices May Spike as Odds Increase of US Sanctions on Venezuela).

A History of Bad Business

Venezuela’s lack of investment in its state oil company — Petroleos de Venezuela or PDVSA — may leave it crippled even if the current political regime were overturned, according to Barron’s, which also notes the nation’s checkered past with foreign oil firms left holding contracts that Venezuela has backed out of in years past. In fact, Exxon Mobil Corp. (XOM) and ConocoPhillips Co. (COP) are still in arbitration with Venezuela over 2007 government actions.

The oil companies are apparently angling for better results: Schlumberger NV (SLB) has severely limited activity since the second quarter of 2016 until it has visibility on getting paid, per Barron’s. The story points out the international and national oil companies with the most exposure to Venezuela: Chevron Corp. (CVX), France’s Total SA (TOT), Repsol SA of Spain (REPYY), Eni SpA (E) from Italy, and Russia’s Rosneft.

Rosneft has provided $6 billion in financing to Venezuela, which used its Citgo refineries in the U.S. as collateral in the deal last fall, per Barron’s. The Russian company has oil-for-loan deals with the government and state-run PDVSA, and the two have joint ventures together—although Barron's points out that many of them have not been developed yet due to lack of funding by the state company.

The Credit Suisse research note posits that Rosneft’s loans may get some priority over other payments, adding that China has more exposure to Venezuela and those loan repayments “appear to be behind schedule.” 

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