Oil crisis in Venezuela

O Poder360in partnership with the (Brazilian Infrastructure Center), presents a new episode of the program. The oil and gas specialist, partner at the consultancy, analyzes the oil crisis in Venezuela.

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In the 147th episode of Infra em 1 Minuto, Rodrigues analyzed the main factors that explain the crisis in oil production in Venezuela, a country that has the largest proven reserves in the world, estimated at around 303 billion barrels.

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Despite the geological potential, Venezuelan production fell from 3 million barrels per day in the late 1990s to less than 800,000, a decline of more than 70%. According to Rodrigues, the deterioration of the infrastructure of (Petróleos de Venezuela, SA) was decisive for this scenario, with fields without adequate maintenance, refineries operating well below capacity and failures in the heavy oil dilution systems.

A large part of the reserves are concentrated in the Orinoco Oil Belt, where heavy oil requires specific technology and continuous access to diluents in order to be transported and processed. These characteristics increase operating costs and increase logistical complexity, imposing additional obstacles to the recovery of production.

Rodrigues highlighted that the resumption is “technically viable”. Recent experiences from countries such as Iraq and Libya show that production can be restored even after prolonged collapses, just as Venezuela itself managed to recover after the 2002–2003 oil strike.

However, the current challenges are considered to be deeper. Among them are the reconstruction of specialized human capital, the attraction of tens of billions of dollars in long-term investments and the reestablishment of an environment of legal security for the sector.

For the analyst, any relevant recovery must be measured “in years, not months”. In the global market, Venezuela remains a potential additional source of supply, capable of adding significant volumes of oil, but whose materialization depends on political, institutional and economic conditions that go far beyond favorable geology.

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