VENEZUELAN oil officials are keeping their fingers crossed: Unless a sudden surge of nationalism gets in the way, the Western Hemisphere's largest oil-reserve holder should soon be opening some of its highest-quality petroleum fields to foreign exploration and production.
If the Venezuelan congress approves oil production legislation as expected, foreign companies will be allowed access to the country's highly valued low- and medium-crude oil fields for the first time since the industry was nationalized in 1976.
The national oil company Petroleos de Venezuela (known as PDVSA) proposed the legislation last year. But congressional preoccupation with Venzuela's economic crisis and concerns from the left that ''opening'' oil to foreign interests goes too far have held up the bill.
Yet oil analysts are optimistic that last weekend's meeting between the legislation's promoters and left-wing political parties will get the ball rolling again.
''Things have been at a standstill, but with this meeting, prospects should be good for a consensus,'' says Jorge Villalba, an industry analyst with Consultores 21, a political and economic research firm here.
US reliance on oil
Most Americans think of Arab kingdoms or perhaps Mexico or the North Sea when the topic of foreign oil arises. But Venezuela is the second most important source of crude oil for the United States after Saudi Arabia.
PDVSA officials also enjoy pointing out that Citgo, the Venezuela-owned gasoline distributor, supplies more retail outlets in the US than do either MacDonald's Corporation or Burger King Corporation.
PDVSA suggests that the only way to considerably boost oil investment is for foreign companies to participate through profit-sharing contracts on a dozen promising on- and offshore fields. For officials at PDVSA, the urgency to develop is clear.
Venezuela could stick to funding its own exploration and production of its vast high-quality fields. But at its current investment capabilities, it would be well into the next century before the known reserves were developed. During that time, other producers such as Colombia, Vietnam, Russia, China, and Indonesia will be coming on strong in the world market.
But with foreign participation, an estimated $55 billion in necessary capital to develop Venezuela's reserves could be invested over 10 years, more than two-thirds of it through the private sector, officials estimate.
''Either we develop now, or a lot of this oil is going to stay in the ground,'' says Ronald Pantin, PDVSA's corporate planning coordinator. He notes prognostications that fossil-based fuels will probably dominate energy needs for only another 70 years or so.
Venezuela's drive to widen foreign participation in its oil activity contrasts with Mexico, where exploration and production remain off limits to foreign companies. But in Venezuela, Energy Minister Erwin Arrieta supports PDVSA's ''associations'' program, saying ''It's very simple: The easy oil is almost exhausted, so while oil and oil policy remain in our control, we will invite outside interests to join with us in the more expensive but promising extraction from these new areas.''
The new profit-sharing scheme builds on a 1993 project involving foreign companies in multibillion-dollar joint ventures to extract and process heavy crude. Under the new program, designed to boost Venezuela's reserves in light and medium crudes, foreign companies will be selected based on how much of their after-tax profits they pledge to turn over to the state.
If the exploring company finds nothing, it alone bears the loss. But if oil or gas is found, the company then must enter into a joint venture with one of PDVSA's operating subsidiaries to develop the find.
The program is expected to draw considerable interest, in part, because of Venezuela's attractive exploration prospects. ''For every 10 wells drilled, six are commercial,'' Mr. Pantin says. ''Venezuela rates five stars for geological prospectivity.'' The world's sixth-largest petroleum producer at 3 million barrels a day, Venezuela has more than 60 billion barrels in proven reserves -- not including huge fields yet to be tapped.
Last year PDVSA surpassed Royal Dutch/Shell as the world's second-largest oil company based on six measures from petroleum product sales to crude-oil reserves and output, according to Petroleum Intelligence Weekly. And despite Venezuela's reputation for bloated bureacracy and basket-case publicly owned companies -- not to mention the country's current steep economic decline -- the state-owned PDVSA stands out as a competitive and aggressive moneymaker.
Still, the five-star rating generally awarded to both PDVSA and Venezuela's exploration prospects dims to a weak one star when the country's fiscal and operating conditions are judged. ''The rules of the [exploration] game aren't very clear, the laws are old and often open to wide and confusing interpretation,'' says Mr. Villalba, adding that the country's labor and environmental laws are also worrisome for potential investors.
Pantin acknowledges this, noting that by comparison to Venezuela the North Sea ''earns only one star for prospectivity -- but five shiny stars for its fiscal regime.''
Still, PDVSA shudders at the thought of a wide-open revision of Venezuela's body of exploration legislation -- a task that could take years and would likely scare away foreign companies.
But Pantin says foreign companies are attracted to the proposed ''associations'' to develop light and medium crude -- more than 200 companies from around the world have already expressed an interest -- because the legislation, while complex, offers good prospects for profit. ''A better than 30 percent rate of return is expected,'' he says. ''If it drops below 30 percent, then the royalty will be lowered.''