Venezuela’s oil production is poised to reverse a dramatic decline that has seen exports fall by nearly half during Hugo Chavez’s time as president. Following Chavez’s death Tuesday, Venezuela, which is a member of OPEC and sits on the world’s second-largest oil reserves, faces near-term political uncertainty that could bring further turmoil to its oil industry. And even under the best circumstances, it would take years to increase production and exports, analysts say. But any new government would have a powerful economic incentive to make that a top priority.

Exports fell from 3 million barrels per day in 2000 to 1.7 million barrels per day in 2011. Chavez relied heavily on the country’s oil income to fund social programmes, but reinvested relatively little of it to exploit new oil fields and replace depleted ones.

There has been no indication from the country’s national oil company, Petroleos de Venezuela, SA, or PDVSA, whether it will invite more foreign investment or increase its own investment in new production. But Chavez held such sway over the company’s direction that his death means the direction could change dramatically.

“Without his charisma and force of character, it is not at all clear how his successors will maintain the system he created,” said Daniel Yergin, author of a Pulitzer Prize winning book on global energy politics.

Markets respond
The world oil market’s response to Chavez’s death was muted.

Oil rose slightly in electronic trading in New York to $91.05 per barrel. That’s 8 times the price of a barrel when Chavez took office 14 years ago.

Analysts say Venezuelan production will likely fall further in the short term due to lack of clear directions for oil firms.