Venezuela: Producing Oil Amid Political Unrest

Editor's Note: The following is the first installment of a three-part series assessing the endemic risks of Venezuela's energy sector. Part 2 will examine the country's infrastructure vulnerabilities. Part 3 will examine its prospects for a turnaround.

Concerns abound as to whether Venezuela's recent political unrest will eventually disrupt the flow of oil exports. Certainly the concerns are justified; interruptions affect U.S. Gulf coast refineries as well as Caribbean, European, Indian and Chinese consumers, and they deny the Venezuelan economy a source of much needed revenue. Such was the case in 2002, when oil workers went on strike amid even fiercer unrest.

But a lot has changed in the past 12 years. State oil company Petroleos de Venezuela, or PDVSA, is much more firmly under government control. And Venezuela's energy infrastructure is sequestered from the cities in which the protests have taken place. The biggest threat to Venezuelan oil production is not the protest movement but the continued degradation of the energy sector.