President Hugo Chavez speaks of getting robust foreign investment in Venezuela's oil sector, but major oil companies don't seem to be prepared to actually spend much as long as the global economic downturn slogs on.
Big oil companies, like most economists, worry the worldwide slump is anything but a typical economic decline, which could mean the droop in energy demand will endure.
At the same time, companies are skittish on Venezuela as Chavez' socialist tendencies and anti-capitalist rhetoric create an uncertain regulatory environment. Also hampering enthusiasm is that much of Venezuela's crude reserves, while vast, are tar-like and extra heavy, which never sells well when global oil demand is weak.
Given all that, a country like Venezuela that poses virtually no geological risk for oil companies is nonetheless finding itself struggling to convince companies to start spending money to develop new fields.
The lack of new investment, on top of the drop in global prices for crude, is putting a hurt on this oil-rich nation's economy, which saw a contraction in the second quarter for the first time in five years and faces budgetary pressures in 2010 that it hasn't seen in years.
Budget woes have also hit another oil giant, Russia, and Chavez may be forced to embark on the same path as Prime Minister Vladimir Putin, by offering a more welcoming voice to foreign investors.
Still, if you listened only to Chavez, you'd think foreign oil companies are already banging down the doors to invest in Venezuela and are ignoring all the concerns about the global slowdown.
The leftist-populist leader announced in recent weeks that state oil company Petroleos de Venezuela SA, or PdVSA, and a consortium of Russian companies were spending upward of $26 billion on oil projects. He also said PdVSA will team up with China to spend $16 billion over the next three years for oil drilling and other energy projects.
Most recently, the Chavez administration said French oil company Total SA (TOT) could invest $25 billion in a joint venture with PdVSA that would include construction of a refinery or upgrader to make heavy crude lighter and more marketable.
In all, that's nearly $70 billion worth of supposed new investments, a figure that doesn't even include an upcoming Carabobo drilling auction that could lead to investments of more than $100 billion.
Virtually none of the money from the Carabobo project or the bilateral plans Chavez has discussed has been invested yet, either by PdVSA or its planned foreign partners. At most, companies have signed memorandums of understanding, which are non-binding gentlemen's agreements that are often ignored or drastically changed.
In some respects, Chavez recent talk about big spending in the sector comes with the territory, as the global oil industry is famous for bragging about huge investment plans. And Chavez himself has been talking about multi-billion dollar oil plans for years, much of which hasn't panned out.
Nonetheless, analysts say his recent comments shouldn't be completely written off as hot air. Depending on what happens to oil prices in the coming months, many of the plans could bear fruit in this country, whose oil reserves are among the largest in the world.
Abelardo Daza, a professor for the IESA business school in Caracas, said if oil prices can stay above $50 and settle closer to $70, foreign companies are likely to start spending in Venezuela. Venezuelan oil prices are averaging a bit above $50 this year and were at $62 last week.
Daza says Chavez' polarizing politics could result in some companies being more interested than others.
"I don't expect most U.S. companies to invest heavily," he said. "But companies from places such as Russia, China, France and Norway, they could make a big presence here."
The first chance to see what countries and companies are ready to spend on new investments in Venezuela could come in January when the long-delayed Carabobo auction, Venezuela's first oil licensing round in years, is due to take place.
The project gives international companies the chance to bid for seven blocks in the Orinoco region, where huge reserves have been proven. The bidding has hit roadblocks because of disputes over how much companies would have to pay in royalties and taxes, but Chavez' government has recently hinted it's ready to sweeten those terms.