Analyst: Venezuela May Draw More Foreign Investment Than Mexico
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America's friendship with its No. 2 oil supplier, Mexico, has been strained by anti-immigration rhetoric; and the U.S.' No. 4 oil provider is Venezuela -- which just moved to nationalize the industry. Should Yanks be nervous about energy security? Two policy experts appeared on "Power Lunch" to weigh in on the issue.
Sarah Ladislaw, Energy Program fellow at the Center for Strategic and International Studies, says the playing field is still uncertain: While Venezuela's strongman leader Hugo Chavez has decreed his government will take majority control of oil businesses -- a seizure that affects Exxon Mobil, ConocoPhillips, Chevron, British Petroleum, Norway's Statoil and France's Total -- she notes that the nationalization there has been gradually developing since 2001.
As for Mexico, Ladislaw explained that the country's constitution has forbidden foreign or private investment in its nationalized oil industry since 1938 -- which she says has "hamstrung" Mexican oil firm Pemex. The company has dealt with the dual prongs of being blocked from fresh capital on the one hand, and being used as a cash cow for government financing on the other.
Shannon O'Neil, Adjunct Fellow for Latin American Studies at the Council on Foreign Relations, added a surprising conclusion. She told CNBC's Bill Griffeth that after six years of negotiations, the petro-giants are "not worried" by Chavez' so-called "21st-century socialism."
O'Neil believes the firms will "still make profits," even with only minority stakes in Venezuelan oil concerns. And in an echo of China's economic/political paradox, she predicted that "we might see more foreign investment in Venezuela" -- perhaps "even more than in Mexico."
