As exports slide, oil prices remain stagnant, and its economy falters, Caracas is searching for new investment to replace the US and European oil companies that were largely driven out two years ago. With cash short, Venezuela is holding up payments to contractors. Oil service companies are halting drilling for non-payment of bills and last week the Brazilian firm building the Caracas metro slowed work for non-payment. In addition to bills from contractors, the government is said to owe abut $10 billion to pay for firms it has nationalized in recent years.
President Chavez is pinning his economic hopes on increasing production from the Orinoco heavy oil deposits which the government says contains 272 billion barrels of oil. Last week Chavez announced a $6 billion dollar deal with a consortium of Russian firms to drill in the Orinoco basin. Caracas is also evaluating bids from two Chinese state oil companies for blocks in the Orinoco; holding talks with South Korea to help develop heavy oil and gas fields; and has signed an energy agreement with Japan. Caracas says four Japanese oil companies are considering investment in the Orinoco.
These agreements will take many years to produce results. Exploiting heavy oil fields is both technically challenging and expensive. Besides Beijing, only several of the international oil companies Chavez kicked out last year have much spare capital to investment in long term oil projects right now. Given the precarious state of the global economy and the increasing likelihood of political unrest, it is doubtful that much will come from all this activity.