Guyana is seen as a more attractive oil investment destination as Venezuela works through a sovereign debt restructuring process that analysts say could take years to complete, according to an S&P Global analysis published on May 20.
The report examined Venezuela’s plans to restructure sovereign debt and obligations tied to state oil company Petróleos de Venezuela, S.A. (PDVSA), and how they could gradually improve investor confidence in the country’s oil sector, despite ongoing challenges.
Analysts noted that Venezuela remains among the world’s highest-risk oil and gas investment jurisdictions, with Texas-based energy attorney Ted Borrego saying major international operators may continue favoring more stable opportunities such as Guyana.
“The big guys? There are so many other places that they can make money that going back to Venezuela is going to be a real stretch… There are a lot of places in Latin America that are much more attractive, e.g., Guyana, just next door, or in the rest of the world that don’t have the problems inherent in Venezuela,” Borrego said.
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John Haley, a partner at Nelson Mullins law firm, said the process of restoring investor confidence and restructuring debt will likely happen at the same time rather than sequentially.
“Can everything be repaid before operators go back in? It’s just not feasible… So I think it’s something that needs to be done on parallel tracks,” Haley said.
However, Philip Luck, director of the economics program at the Center for Strategic and International Studies, said debt restructuring alone will not be enough to unlock large-scale investment.
“Venezuela still faces significant challenges in its physical infrastructure, human capital, and the governance of both the oil industry and the country writ large… Liabilities are likely close to 200% of GDP. Past precedent puts the average time that restructurings of similar scale take at around 30 months,” Luck said.
According to S&P Global Ratings analysts, Venezuela’s external debt burden is estimated at between US$150 billion and US$200 billion.
The analysis noted that Venezuela’s oil production averaged 1.13 million barrels per day (b/d) in April, up 4.8% from March. PDVSA is targeting an output of 1.37 million b/d by the end of 2026 while updating production participation contracts under a revised hydrocarbons law.
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In contrast, Guyana has emerged as a more stable and predictable oil investment destination, with offshore developments advancing under stable fiscal terms and without the debt, sanctions, and governance challenges facing Venezuela.
The Stabroek Block is operated by ExxonMobil, with co-venturers Hess and CNOOC. Exxon is currently producing more than 900,000 barrels of oil per day. Output is expected to rise above 1 million barrels per day once the fifth development, Uaru, comes online later this year.
