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Venezuela is on track to produce 1 million barrels of oil daily, marking a significant recovery in the industry after years of sanctions and divestment

Written by Noel Budeguer
Published 16/06/2024 às 09:56
Oil - Venezuela - industry - production
Venezuela is on track to produce 1 million barrels of oil daily, marking a significant recovery in the industry after years of sanctions and divestment

Oil production in Venezuela could reach 1 million barrels per day. Find out how the country is overcoming sanctions and economic challenges to revitalize its main Get to know

Pedro Rafael Tellechea, Minister of Petroleum, pointed out that Venezuela is currently producing more than 950.000 barrels of oil per day (bpd). The Venezuelan Minister of Oil, Pedro Tellechea, reported that the country is close to producing one million barrels of oil per day, a mark it has not reached for more than five years.

“We can officially say that we are above 950.000 barrels per day (bd),” said Tellechea, who also presides over state-owned Petróleos de Venezuela (PDVSA). “In the next few days we will be reaching one million barrels, a joy for Venezuela”, added the official during the inauguration in Caracas of a new gasoline distribution system.

Challenges and Impact of Sanctions on the Petroleum Sector

According to the Organization of Petroleum Exporting Countries (OPEC), the South American country's production stood at 910.000 bd at the end of May. The last time Venezuela achieved production above one million barrels was at the beginning of 2019, the year in which the United States applied a series of sanctions that included an embargo on Venezuelan oil.

In 2020, production fell below 400.000 bd, marking the lowest level in three decades, which the government blames on “coercive measures” applied by Washington to unsuccessfully force President Nicolás Maduro out. Maduro, in turn, seeks a third six-year term on July 28.

As sanctions imposed by the United States had a profound impact on the Venezuelan oil industry, affecting not only production, but also the investment and maintenance capacity of production and refining infrastructures. The drastic reduction in oil production generated an economic and social crisis in the country, exacerbating shortages of basic products and medicines.

Production Recovery

Last October, the United States partially lifted the embargo for six months, following agreements between the Executive and the opposition on the election, but reversed the measure after questioning the Government's actions surrounding the process. This temporary measure provided momentary relief for the oil industry, enabling a slight recovery in production.

Companies wishing to operate in the country must now apply for individual licenses in Washington, such as the one owned by the giant Chevron. Several companies have already requested them, such as the Spanish Repsol and the French Maurel & Prom (M&P). Obtaining these licenses is crucial for companies to continue their operations and investments in Venezuela, contributing to the gradual recovery of oil production.

Corruption and Divestment in the Oil Industry

Experts agree that, in addition to sanctions, endemic corruption and years of disinvestment also contributed to the collapse of this industry which, in 2008, had a production of over 3 million barrels per day. Corruption at PDVSA, the country's main state-owned oil company, has been a persistent problem, with numerous cases of misappropriation of resources and mismanagement of funds intended for maintenance and expansion of production capacity.

The lack of adequate investment over the years has also resulted in a significant deterioration of production and refining infrastructure, compromising the industry's efficiency and responsiveness to fluctuations in the global oil market. Furthermore, the flight of talent and the loss of qualified labor have further aggravated the situation, making the recovery of the Venezuelan oil industry more difficult.

Future of Industry in Venezuela

The future of Venezuela's oil industry depends on a number of factors, including the government's ability to attract new investment, implement structural reforms and combat corruption. The recovery of oil production to pre-crisis levels is essential for revitalizing the country's economy and improving the population's living conditions.

Venezuela has one of the largest oil reserves in the world, which represents enormous potential for economic growth and development. However, realizing this potential requires a coordinated and sustained approach, involving collaboration between government, the private sector and the international community.

In short, as Venezuela approaches the one million barrels of oil per day mark, the challenges facing the industry are complex and multifaceted. Overcoming these challenges is crucial to ensuring a prosperous and sustainable future for the country and its population.

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Noel Budeguer

Of Argentine nationality, I am a news writer and specialist in the field. I cover topics such as science, oil, gas, technology, the automotive industry, renewable energy and all trends in the job market.

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