Venezuela’s energy sector on a revival journey as Middle East exports endure disruption
In the midst of every crisis lies great opportunity.
It’s a sentiment that resonates as Gulf energy suppliers remain disrupted while Venezuela grows oil exports and re-engages with Western markets.
A reawakening of the South American nation’s huge hydrocarbons potential is nascent. Yet, the Israel/US war with Iran has provided an opportunity for Venezuela to again truly harness its abundant but largely neglected resources, including 300 billion barrels of proven oil reserves.
Realising potential
Following the January 3 US removal of President Nicolas Maduro and installation of an interim administration, the Venezuelan National Assembly approved sweeping reforms to the Hydrocarbons Law on January 29, reversing decades of nationalisation and encouraging private and foreign investment, including enhanced autonomy for private producers.
Operation Epic Fury followed on 28 February, choking oil and LNG traffic through the Strait of Hormuz.
Meanwhile, Venezuela’s oil shipments to US refiners have increased after Washington eased sanctions and issued general licenses allowing energy companies to operate oil and gas projects in the OPEC member country.
Since 3 January, some 150 million barrels of Venezuelan oil have been sold, according to US Energy Secretary Chris Wright. He said it is producing more than 1.2 mbpd and has stored about 50 million barrels, “they couldn’t get to market”.
A changing geopolitical landscape has tightened oversight, ending Venezuela’s “shadow fleet” arrangement with Iran-linked intermediaries to ship crude to Asia in favour of regulated markets.
But its energy infrastructure is dilapidated after infrastructure underinvestment and alleged widespread corruption under Maduro.
A costly rebound
In March, Venezuela opposition leader Maria Corina Machado told CERAWeek by S&P Global Energy that her country has the potential to increase crude production to 5 mbpd — a $1.7 trillion opportunity if democratic transition brings sustained legal overhauls and long-term foreign investment.
Compare that to February, when state-owned oil company Petróleos de Venezuela (PDVSA) produced 1.062 mbpd (Ministry of Hydrocarbons data). The sector produced 3 mbpd in 2008.
Rystad Energy analysts cited a “realistic technical pathway” back to that level, with “enormous” capital deployment.
It believes $53 billion upstream and infrastructure investment is needed over 15 years just to keep crude production at 1.1 mbpd; 1.4 mbpd production could be restored in under 24 months via workovers, infrastructure repair, and selected short-cycle upstream investment, costing $14 billion.
Rystad suggested a $183 billion bill to bring Venezuela’s crude production back to about 3 mbpd by 2040.
Machado proposed that oil and gas companies receive 25-year contracts with 20% royalties, under which producers would own “production right out of the wellhead and be able to book the reserves.” And property rights backed by international arbitration and enforceable legal guarantees.
International appetite
Global oil majors are responding.
Spain’s Repsol confirmed on 16 April that it had signed an agreement with the government and PDVSA to resume operational control of the Petroquiriquire oil asset, along with payment guarantee mechanisms.
Repsol is prepared to increase production by 50% within 12 months and triple it over three years; its current production in Venezuela amounts to around 45,000 bpd.
Last month, Repsol and Italy’s Eni signed a strategic agreement with Venezuelan authorities to ensure continuity of natural gas production throughout 2026 at the Cardón IV asset (50/50 owned by the companies).
Chevron signed deals this week to expand operations and was granted an increased stake in a Petroindependencia joint venture.
Shell is broadening Venezuelan offshore natural gas field operations; it was granted a 30-year license to develop the 4.2 trillion cubic feet (tcf) Dragon field project alongside Trinidad’s National Gas Company and is seeking rights to exploit three additional fields. Together, they represent 12 tcf of combined reserves that Shell plans to process into LNG in Trinidadian facilities. It also signed agreements to run light and medium-crude projects in eastern Venezuela’s Punta de Mata Division.
Future promise
Some energy companies, though, are waiting for Venezuela’s oil ministry to publish detailed models for JVs and production contracts as they evaluate investments. And PDVSA is said to be reviewing 26 JVs, including Production Participation Agreements granted between 2024 and early 2026.
Since Maduro’s removal, the Trump administration has issued licenses to expand US influence in Venezuela, particularly in key economic sectors such as hydrocarbons, including two this week by the US Treasury Department’s Office of Foreign Assets Control (OFAC), facilitating transactions with Venezuelan state institutions.
India’s Reliance Industries received a US OFAC license in February to resume direct purchases of Venezuelan crude. The first PDVSA cargo was loaded this month.
The country’s energy sector outlook is improving. However, this week Venezuela’s interim President Delcy Rodriguez urged US removal of all sanctions “so all investments can be developed fully”, telling a US delegation Venezuela hoped to establish a long-term energy partnership.
