Venezuela’s crude oil production currently averages 800,000 barrels per day (bpd), significantly lower than its peak of 3.5 million bpd in the 1990s. Production has declined due to various factors, including the expropriation of U.S. oil assets in 2007 and the global oil price crash from 2014 to 2016. Although there has been a slight recovery in recent years, the nation’s oil reserves are substantial, estimated at 241 to 300 billion barrels, among the highest globally.
The recent capture of President Nicolás Maduro and his indictment in the U.S. have raised questions about the potential return of major oil companies to Venezuela, which could help revive its oil output. However, Wall Street remains cautious, citing “above-surface constraints” such as lack of investment and management challenges as significant issues facing the industry since nationalization began.
Chevron is the only major U.S. oil company currently operating in Venezuela, producing approximately 240,000 bpd through a joint venture with the national oil company, PDVSA. Chevron’s Vice Chairman indicated that production could increase by 50% within the next 18 to 24 months under disciplined investment. Meanwhile, U.S. Energy Secretary Chris Wright mentioned that the U.S. has received significantly higher prices for Venezuelan crude in recent sales.
Despite the potential for growth, analysts caution that any significant increase in production will require substantial investments, estimated between $15 billion and $20 billion over a decade to achieve 1.5 million bpd. Analysts at JPMorgan Chase estimate that with political stability and unrestricted operations, Venezuela’s production could reach up to 1.2 million bpd within months and could hit 2.5 million bpd within the next decade.
Recent trading dynamics have seen the U.S. oil refining system positioned to efficiently process Venezuelan crude, with initial purchases made by companies such as Valero Energy. However, research indicates that the outlook remains cautious, with analysts predicting limited near-term changes in production levels while emphasizing the potential for longer-term improvements.
Experts highlight the risks posed by continued sanctions and the need for significant capital investment, noting that restoring production to 3 million bpd would require around $180 billion over 15 years. Until there is a change in the political or economic landscape, many uncertainties cloud the future of Venezuela’s oil industry.
Source: Reported based on publicly available information from www.cnbc.com.
