Venezuela could boost its long stagnant oil output considerably in just five to seven years if it offers investors greater certainty over contracts, an executive of Russia's Lukoil said.
Under president Hugo Chavez, who died on Tuesday after 14 years in power, foreign oil companies in Venezuela, the world's 11th largest crude exporter, have faced price controls and currency devaluations along with threats of nationalization.
Output has dropped from some 3.5 million barrels per day when he was elected and Venezuela pumped just 2.34 million bpd last month, according to analysts.
"In my opinion in the next 5-7 years it is possible to really grow oil production in Venezuela," said Andrei Kuzyayev, vice president and head of foreign projects at Lukoil, Russia's second-largest crude producer, which is active in the Latin American country.
"But you need a quiet situation, stability in contracts and a good situation for investment," Kuzyayev told Reuters on Friday.
The socialist leader's death is unlikely to have a big impact on Venezuela's oil sector in the short term, with key projects expected to stay on track if his preferred successor wins elections due to be called in the next 30 days.
An opposition victory could eventually lead to an increase in foreign investment, but analysts said this could take years.
Venezuela, a member of the Organization of Petroleum Exporting Countries, is a top-four supplier to the United States and an increasingly important oil source for China. In 2011, it overtook Saudi Arabia as the country with the world's biggest crude reserves.
Lukoil is developing heavy oil in Venezuela's Orinoco basin as part of the Junin 6 consortium led by Russian state oil major Rosneft.
Lukoil is also relying on projects in Iraq, Uzbekistan and West Africa for future production growth.
In Iraq, Lukoil is developing one of the world's largest fields, West Qurna 2, and has recently agreed to new terms with the government.
Some companies argue that contract terms offered by Iraq are tough and unprofitable, but Kuzyayev said they were better than those in Venezuela, especially after Baghdad agreed to new terms.
"In Iraq you have clear terms governed by your contract. In Venezuela apart from the contract you have legislation limits, specifics in signing contracts and selling fuels. All this creates uncertainties for investors," Kuzyayev said.
Kuzyayev said Lukoil wanted to produce 650,000 barrels of oil equivalent per day outside Russia within five years or a fifth of its overall production, up from 10 percent now.
Growth will come initially from Iraq and Uzbekistan and the figures could rise over time if deep-water exploration in Sierra Leone, Ivory Coast and Ghana proves successful.
Lukoil is exploring eight blocks in the three West African countries and Kuzyayev said the company would soon buy into one more block in Ivory Coast.
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