Venezuela produced an average of 1.1 million barrels of crude daily this month, up from 942,000 barrels daily in February, according to a PDVSA presentation, as cited by Reuters.
The turnaround followed the selective lifting of sanctions by the United States after it removed President Nicolas Maduro from power and took him to the U.S. to stand trial for drug trafficking, while effectively taking over Venezuela’s oil industry.
The turnaround will take a while, however. In the 1990s, Venezuela pumped around 3 million barrels of crude daily, but since then, the combination of bad management and U.S. sanctions has significantly reduced its production.
After the U.S. took control, however, things seem to be looking up, with Big Oil starting to return to the Latin American country, not least thanks to a legislative change giving oil companies more freedom and predictability.
The new law, passed earlier this year, caps royalty rates at 30% but allows the government to set individual royalty rates for projects based on factors such as investment needs and competitiveness. Following the adoption of the new law, Venezuela’s interim president Delcy Rodriguez said she expected fresh oil investments of as much as $1.4 billion this year.
The law also stipulates that private companies “will assume full management of the activities at its own expense, account, and risk, after demonstrating its financial and technical capacity through a business plan” that will be subject to approval by the Venezuelan oil ministry. The ownership of the resources to be developed by private companies, however, will remain with the Venezuelan state.
As a result, Chevron is reportedly in talks to expand its Petropiar joint venture with PDVSA, and Shell is in talks for the development of fields in eastern Venezuela, in the Monagas North area. The area contains some of Venezuela’s few deposits of light and medium crude. Shell also has plans for developing natural gas resources in Venezuela, both offshore and onshore.
By Irina Slav for Oilprice.com
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