India’s Jindal Power Ltd has abandoned a significant agreement with Venezuela’s state-owned oil company, Petroleos de Venezuela (PdVSA), marking a major setback for Venezuela’s efforts to revive its struggling oil sector, according to Bloomberg.
In May, Jindal Power entered into a joint venture with PdVSA to participate in the Petrocedeno project, located in the Orinoco Belt, one of the world’s richest oil regions. The $300 million deal, which was meant to modernize and upgrade equipment for processing Venezuela’s heavy crude oil for export, was Jindal’s first venture into the oil industry.
The collapse of this deal highlights the difficulties Venezuela faces in attracting foreign investment to its oil and gas sector, burdened by domestic political instability and stringent U.S. sanctions. While the U.S. has relaxed some sanctions on Venezuela, those on PdVSA remain intact. In July, the U.S. Office of Foreign Assets Control (OFAC) extended a license that permits certain transactions related to the export of liquefied petroleum gas (LPG) to Venezuela until July 2025. However, dealings with PdVSA, in which the Venezuelan government holds a 50 percent or greater interest, continue to be prohibited under several executive orders.
These sanctions remain a significant obstacle for Venezuela’s oil industry, which has seen production fall drastically. Once producing 3.2 million barrels per day (bpd) in 2000, Venezuela’s crude output has dwindled to just 735,000 bpd due to export restrictions and poor maintenance.
The sanctions situation was further complicated by Venezuela’s chaotic elections. President Nicolás Maduro and his government have been accused of manipulating election results and repressing dissent to retain power. Despite opposition candidate Edmundo González Urrutia reportedly winning the most votes, the Maduro-controlled National Electoral Council (CNE) declared a victory for Maduro. The U.S. and international observers have called out the lack of transparency, as the CNE has yet to produce original tally sheets, unlike previous elections in 2013 and 2018.
Further heightening tensions, a Venezuelan judge issued an arrest warrant for 75-year-old González, a former diplomat, accusing him of conspiracy and falsifying documents related to the election. This development has added to the broader political crisis in Venezuela, where the combination of economic hardship, sanctions, and political unrest continues to hinder the country’s oil sector.
Meanwhile, neighboring Argentina has been experiencing a contrasting trend, with its oil production on the rise. Under the leadership of libertarian President Javier Milei, Argentina is looking to capitalize on its resources, while Venezuela remains mired in political and economic challenges.
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