Editor’s Note: Allan Dodds Frank is an Emmy and Loeb Award-winning business investigative correspondent who has worked for ABC, CNN and Bloomberg television, as well as Forbes, The Washington Star and The Anchorage Daily News. He is a past President of the Overseas Press Club of America. The opinions expressed in this commentary are solely his own.

CNN  — 

Venezuela’s future is in limbo, as its embattled president continues to fend off a national movement for regime change. And whether President Nicolas Maduro consolidates his power, or opposition leader Juan Guaido takes control of the government, one longterm question hangs over the country’s fate: “Who gets Venezuela’s oil?”

The importance of that unsettled question became even clearer last month, when Guaido, the 35-year-old National Assembly President, failed to convince the military to abandon Maduro. Now an international financial chess match is afoot, between the US and more than 50 countries backing Guaido as the country’s legitimate interim president, and those nations aligned with Maduro.

To support Guaido, the United States has initiated an array of sanctions to hamper Maduro’s oil sales by the state-controlled company PDVSA (Petróleos de Venezuela, S.A) and to steer money to accounts controlled by Guaido.

Meanwhile, Venezuela’s two biggest creditors, China and Russia, are backing Maduro and keeping an eye on what they’re owed. Cuba too has strengthened the regime by sending thousands of security forces in exchange for free oil.

Venezuela’s oil riches—and woes

Venezuela holds the largest oil reserves in the world. It also has enormous debt, and its creditors’ scramble to get paid is a major factor in the worldwide split over Venezuela.

Rampant inflation has made Venezuelan currency virtually worthless, and oil is its foremost means of repaying creditors. The problem is that its oil supply is only valuable when it can be extracted and processed—and the country’s crumbling infrastructure simply cannot produce enough oil to serve as collateral against the complete ledger of debts.

Thanks to mismanagement and nationwide electrical outages, oil production has declined from more than 3.5 million barrels a day in 1998 – the year before Chavez took power – to 750,000 barrels per day in March 2019, according to field level data from Rystad Energy. Between that and stiff sanctions, Venezuela’s current oil sales raise nowhere near enough money to meet the country’s foreign exchange needs or its credit obligations. More than half the current production is already destined to pay off debts and therefore is not available to be sold for cash on the open world market.

“The total debt is more than six times the annual exports. In fact, the ratio is getting significantly worse this year with the decline in exports. No one is expecting Venezuela to pay its debts and the situation is very bad compared to the number of barrels that actually generate cash flow,” Francisco J. Monaldi, the Latin American Energy Fellow at Rice University’s Baker Institute in Houston, Texas, tells me.