Venezuela's tightened grip on oil companies will have little impact on oil prices in the short term, but it will add to pressure for prices to remain high in the long term because foreign investment will likely be weaker than under a free-enterprise policy, Mr. Tissot says.
James Williams, energy analyst at US-based WTRG Economics, warns that Venezuela's track record of changing contracts before they expire could put future production at risk by making companies reluctant to invest in multi-billion-dollar heavy oil projects.
Mr. Molchanov says recent takeovers of private and corporate property encouraged by the Chávez government have heightened oil company fears. "If companies have to choose, they might pick another country," he says.
And with increased risk in Venezuela, some investors are turning to the tar sands of Alberta, Canada, where free- enterprise policy and political calm has sparked an investment bonanza in the Western Hemisphere's other great long-term oil supply.
"Even though the cost of development is very high, even compared with Venezuela, [companies in Canada] are confident that they are going to recuperate their investments in the long term," Tissot said. "In Venezuela, I sense that they're not sure that's going to be the case." ………***