Latin America Advisor
Energy Advisor
A Publication of The Dialogue
Will Venezuela Be Able to Ramp Up Oil Production?
Power outages took a toll on Venezuelan state oil company PDVSA’s production in July. A worker at the company’s Paraguaná Refinery Complex is pictured. // File Photo: PDVSA.
Venezuela’s crude oil exports fell in July as power outages disrupted state-run oil company PDVSA’s operations, dragging the country’s oil exports down by 27 percent from June levels to just 460,323 barrels per day of crude and refined products, according to Reuters. Meanwhile, Venezuela’s second-largest refinery on Aug. 23 resumed gasoline production after completing unscheduled repairs that extended beyond the 21-day timeline initially given, further crimping the energy sector’s production and output. With global prices for oil relatively high, will Venezuela be able to produce more oil soon and take advantage of strong demand? What needs to happen in order for Venezuela to increase oil production? How might geopolitical dynamics, with the advent of Russia’s war in Ukraine and energy shortages in Europe, improve the outlook for investing and new ventures in Venezuela’s oil sector?
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Francisco J. Monaldi, director of the Latin America Energy Program at Rice University’s Baker Institute for Public Policy: “By the end of 2021, Venezuela’s production recovered from the lows of mid-2020, doubling to 750,000 barrels per day. Such an increase was based on reopening existing potential; no new wells were drilled. The price boom and Iran helped. In 2022, production stagnated as investment continued to lag, while the competition of sanctioned Russian oil in the Chinese market forced steep discounts and unsold crude piled up. A flexibilization of sanctions and regulatory changes are needed to allow foreign companies operational, and cash flow, control. So far, negotiations with Chevron appear to be quite advanced and waiting for a U.S. license. Others may follow. If all goes well…”
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A sister publication of the Inter-American Dialogue’s daily Latin America Advisor, the weekly Energy Advisor captures fresh analysis from business leaders and government officials on the most important developments in oil and gas, biofuels, the power sector, renewables, new technologies, and the policy debates shaping the future of energy in the Western Hemisphere and beyond. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at ebrand@thedialogue.org.
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