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What will Venezuela do with its oil? Top five energy challenges after Chàvez.

With the passing of Hugo Chávez, the issue of what Venezuela chooses to do with its oil moves to center stage for the energy industry – and for environmentalists. Here are five energy challenges that Venezuela will have to face.

3. Relationship with the US

Jorge Silva/Reuters/File
A burning flare is seen at the efinery complex of Amuay-Cardon in Venezuela's western state of Falcon, 350 miles from Caracas. Many of Venezuela's refineries have fallen into disrepair in recent years, forcing the country to import gasoline from the US to satisfy demand.

Chávez made no secret of his disdain for the United States, especially after a 2002 coup that briefly knocked him out of power – the US did not condemn it until it was clear that the takeover had failed. But for all the public tension, Venezuela has remained an important supplier of crude oil to the US. True, it supplied 44 percent less oil to the States last year than in 1998, the year before Chavez came to power. But it remains a top tier supplier. And the decline has much to do with increasing domestic oil production, which has reduced the need for Venezuelan oil.

 Still, the balance of power in the energy sector has changed. When Chávez came to power, Venezuela was a pivotal player in OPEC and the US was dependent on its oil as its own production continued to decline. Now, US production is resurgent, thanks to hydraulic fracturing technology. Venezuela's falling production has weakened its clout and its leverage. Its refineries are tottering from years of neglect, forcing Venezuela to import gasoline from the US to satisfy demand. Last year, a fire at the nation's largest refinery resulted in 42 fatalities.

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Mark Sappenfield
Editor

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