HOUSTON: Venezuela’s troubled oil industry has come sharply back into focus following dramatic developments in US–Venezuela relations, including a large-scale US military air strike and the reported capture of President Nicolás Maduro on Saturday, just a day after he said Caracas was open to negotiations with Washington on combating drug trafficking—an allegation for which US President Donald Trump has presented no evidence.
The unfolding situation has renewed global attention on Venezuela’s vast but underperforming oil sector. The country holds the world’s largest proven oil reserves, estimated at 303 billion barrels as of 2023, yet years of falling production, international sanctions, underinvestment, and technical constraints have sharply limited output and exports.
Despite its enormous resource base, Venezuela’s crude exports remain modest. According to the Observatory of Economic Complexity, the country exported crude oil worth only $4.05 billion in 2023, a fraction of exports by major producers such as Saudi Arabia ($181 billion), the United States ($125 billion) and Russia ($122 billion).
The bulk of Venezuela’s reserves lie in the Orinoco Belt, a vast area of around 55,000 square kilometres in the east of the country. The region contains extra-heavy crude, which is dense, highly viscous and significantly more expensive to extract than conventional oil. Production typically requires advanced recovery methods such as steam injection, as well as blending with lighter crudes to make it exportable. Due to its high density and sulphur content, Orinoco crude usually trades at a discount to lighter oil grades.
Venezuela also exports limited volumes of refined products, including petrol and diesel, but efforts to expand these exports are hampered by ageing refinery infrastructure, operational challenges and ongoing sanctions.
A founding member of the Organisation of the Petroleum Exporting Countries (OPEC)—alongside Iran, Iraq, Kuwait and Saudi Arabia—Venezuela joined the group on September 14, 1960. The country was once a major global supplier, producing as much as 3.5 million barrels per day in the 1970s, accounting for more than 7 per cent of global output. Production slipped below 2 million bpd in the 2010s and averaged around 1.1 million bpd last year, or roughly 1 per cent of global supply.
Analysts say a successful regime change could pave the way for higher oil exports if sanctions are lifted and foreign investment returns. “If regime change proves successful, Venezuela’s oil exports could increase as sanctions are lifted and foreign capital comes back,” said Saul Kavonic, analyst at MST Marquee.
Others, however, urge caution. “History shows that forced regime change rarely stabilises oil supply quickly, with Libya and Iraq offering clear and sobering precedents,” said Jorge Leon, head of geopolitical analysis at Rystad Energy.
President Trump told Fox News on Saturday that the United States would be “very strongly involved” in Venezuela’s oil sector. Venezuela nationalised its oil industry in the 1970s, creating state-owned Petróleos de Venezuela SA (PDVSA). While the sector was partially opened to foreign investment in the 1990s, the election of Hugo Chávez in 1999 led to policy changes requiring PDVSA to hold majority stakes in all oil projects.
PDVSA subsequently formed joint ventures with several international companies, including Chevron, China National Petroleum Corporation, ENI, Total, and Russia’s Rosneft. Once the primary destination for Venezuelan crude, the United States has largely been replaced by China as the main buyer following the imposition of US sanctions.
As geopolitical tensions escalate, the future of Venezuela’s oil industry—central to both its economy and global energy markets—remains highly uncertain.
By Reuters
Additional input from Al Jazeera
