Venezuela expects fresh oil investments of some $1.4 billion this year, which would be up from $900 million last year, interim president Delcy Rodriguez said, as quoted by Reuters.
The investments will come from production-sharing agreements, the report noted, which are currently being discussed by the Venezuelan government and oil companies as part of an overhaul of the country’s oil legislation.
The U.S. government earlier this month issued licenses allowing limited oil-related work in Venezuela. Under those licenses, oilfield service companies are permitted to supply equipment and provide technical services connected to oil production and exports, and to receive payment for that work through approved channels. The measures do not lift U.S. sanctions, but they do allow specific projects to move forward under defined conditions.
These moves by Washington aim to open up Venezuela’s oil industry to external players although some remain cautious about the actual opportunities and the potential returns. Exxon notably expressed such caution during talks with the Trump administration about the potential return of U.S. majors to the South American country. CEO Darren Woods called Venezuela “uninvestable” at the moment, sparking the U.S. president’s anger. Chevron, on the other hand, signaled it would be happy to expand its operations in Venezuela.
Earlier this month, Enverus forecast that Venezuela’s oil production could expand to 1.5 million barrels daily by 2035, which would represent a 50% increase on current production rates. Yet Venezuela’s oil output could swell twice as much under Enverus’s best-case scenario, to hit 3 million barrels daily in 2035. That, however, would depend on global demand and supply balances.
There are also doubts that Venezuela’s massive oil reserves can actually be extracted at a profit at the extent that the total suggests. Energy industry vet Robert Rapier noted in an analysis this month that extracting the heavy crude from the Orinoco Belt is a high-cost endeavor that would require investments in an upgrade of the existing infrastructure, adding to costs.
By Irina Slav for Oilprice.com
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