Venezuela has entered the most consequential reset of its modern history. The removal of Nicolás Maduro on 3 January has abruptly reopened a petro-state that sits atop the world’s largest proven oil reserves yet produces barely a sliver of its potential. After two decades of mismanagement, sanctions, and collapsing infrastructure hollowed out Petróleos de Venezuela, S.A. (PDVSA) and drove output to historic lows, Washington is now betting that a rapid, U.S.-directed revival can turn the country from a stranded giant into a strategic asset. The plan goes far beyond marketing the crude already in storage: it aims to rewire Venezuela’s oil industry, reshape investment rules, and pull the country out of the orbit of Russia and China -- with implications stretching well beyond the Orinoco Belt.
Despite the damaging effects of increased state control under former President Hugo Chávez and the successive administration of Maduro, Venezuela’s oil potential remains enormous. It still holds the world’s largest proven crude reserves -- roughly 303 billion barrels, or about 17% of the global total. Most of this is extra-heavy crude oil from the Orinoco Belt that requires more technical expertise to handle than lighter grades but is cheaper to lift and often more profitable to process. The challenge lies in transporting, upgrading, and refining it, not extracting it. Venezuela’s real constraints are collapsed infrastructure, a chronic shortage of diluent, broken upgraders, sanctions, and the hollowing out of PDVSA. If those bottlenecks were addressed, the country could again produce millions of barrels per day of cheap-to-lift crude, even if downstream handling remained costly. In fact, as recently as 2008, Venezuela was producing around 3 million barrels per day (bpd) of crude oil, but by the end of last year, with all the hurdles in place, output had fallen to around 963,000 bpd.
Looking ahead, external assessments suggest a structured set of opportunities for restoring Venezuelan output, with Macquarie Group’s energy strategist, Walt Chancellor, in Houston, identifying four primary buckets of Venezuelan production potential. “The first is ‘excess declines’ of around 200,000 to 500,000 barrels per day [bpd] potentially attributable to causes that can be easily remedied with sanctions relief and a baseline of investment and de-bottlenecking,” he says, adding that he sees these opportunities falling within a 6-to-24-month timeframe.
The second involves revitalising ‘old fields’, accounting for around 100,000 to 200,000 bpd, which have seen very low levels of investment and activity in the past decade, with these opportunities falling within a 1–3-year window. Third, Chancellor highlights the potential to restore about 200,000 to 300,000 bpd at existing Orinoco extra-heavy oil projects beyond initial de-bottlenecking and repair efforts, a process likely to unfold over a longer 1–4-year horizon, given operational complexity and project ownership. And the fourth bucket involves roughly 500,000 to 700,000 bpd from new investment initiatives, with lead times of around 3 to 6 years. “Of course, each of these buckets of incremental production will offer a distinct set of risk factors/limiting items,” Chancellor notes. “But simply assuming 75% of these potential volumes are achieved, this would point to long-term (around 2030-2032) upside to about 2 million barrels per day, although Venezuela’s production path remains far from certain,” he concludes.
More broadly, Venezuela still holds vast untapped potential. Of its 14 supergiant oil fields, 11 retain more than half of their original reserves, and several major Western firms have maintained a presence, despite the difficult operating environment since Chávez took office in 1999. Chevron is the only U.S. oil producer still active in Venezuela, after receiving a licence under former President Joe Biden in 2022 to operate, despite existing U.S. sanctions. These were imposed in 2015 during President Barack Obama's administration over alleged human rights violations. Nonetheless, the American firm still produces about 244,000 bpd through its three joint ventures: Petroboscan, Petropiar and Petroindependencia. Spain’s Repsol holds 40% of its Petroquiriquire Occidente joint venture with PDVSA, and currently produces 45,000 bpd of crude oil, while the state firm’s other JVs include those with North American Blue Energy Partners, Petro Romaina, and China National Petroleum Corporation. The main Russian firm still active in the country is Roszarubezhneft, which took over Rosneft’s Venezuelan assets in 2020 after the U.S. sanctioned Rosneft’s trading arms. Venezuela recently approved a 15?year extension to its joint ventures with PDVSA in the Boquerón and Perijá fields. Meanwhile, Italian major ENI continues to produce natural gas through the Cardón IV joint venture with Repsol in the offshore Perla field, which supplies around 30% of Venezuela’s gas demand. The U.S. revoked ENI’s ability to be repaid in oil for the gas it produces, but the firm is currently negotiating a new payment mechanism that complies with sanctions.
In the short term, U.S. President Donald Trump’s administration is focusing on monetising what it can from oil held in storage. Trump said early on after Maduro’s capture that Venezuela would turn over 30-50 million barrels of sanctioned oil to the U.S., coming from onshore and offshore floating storage. Recent industry estimates suggest around 34 million barrels of crude was held in storage around Venezuela, with another 3 million in Aruba, and nearly 6 million in the Bahamas. The oil would be sold to U.S. refineries and other buyers, according to U.S. Energy Secretary Chris Wright, with the proceeds deposited into accounts controlled by the U.S. government. “From there, those funds can flow back into Venezuela to benefit the Venezuelan people, but we need to have that leverage and that control of those oil sales to drive the changes that simply must happen in Venezuela,” underlined Wright.
Longer term, as Trump highlighted, the aim is to encourage major international investment back into Venezuela’s key oil fields, and to sell the production that results from that, in the same manner as the stored oil. Chevron and Repsol are expected to lead the initial charge, given their extensive presence on the ground, and bullish comments from management at the firms. Chevron’s vice chairman, Mark Nelson, said within the last week that the firm is ready to boost oil production in Venezuela by about 50% in the next 18 to 24 months, simply by leveraging its existing on?the?ground infrastructure. Around the same time, Repsol chief executive officer, Josu Jon Imaz, said his firm was ready to invest more in Venezuela and triple production there in the next two or three years. That said, such plans -- and tentative ones by other potential entrants -- are likely to require further clarification on the legal standing of such operations and resultant profits.
As it stands, longtime opposition leader Maria Corina Machado proposes downsizing PDVSA, transferring assets to private investors, opening all prospective acreage to exploration, and creating a regulatory agency independent of the state oil company. Her recent meeting with Trump -- at which she presented him with her 2025 Nobel Peace Prize medal (for her work promoting democratic rights for the people of Venezuela) -- went “extremely well for her”, a senior Washington-based legal source close to the current Trump administration exclusively told OilPrice.com last week. Although Venezuela’s acting president (and its Petroleum Minister and OPEC representative) Delcy Rodriguez has vowed to collaborate with Washington, Machado’s role in the future of the country appears to be on the rise. In the absence of any definitive new law on Venezuela’s oil sector, Machado’s team believes that PDVSA’s production and participation contracts granted to international investors under the Anti-Blockade Law could be allowed to run on, albeit a version that reflects a new profit-sharing model and tax system.
In a similar vein, late last week Rodríguez presented legislation to the National Assembly to encourage foreign and other private investment into its oil fields and infrastructure. The legislation aims to incorporate the production models included in the Anti-Blockade Law into Venezuela’s Hydrocarbons Law, allowing these investment flows to be channelled into new oil fields where no investment has ever been made before and fields where there is no infrastructure.
In the end, Venezuela’s re-entry into the global oil system will hinge not only on Washington’s leverage or the enthusiasm of returning majors, but on whether the country can rebuild the institutional scaffolding that decades of politicisation and collapse have stripped away. The outlines of a new model are emerging -- a slimmer PDVSA, deeper private participation, and a regulatory framework that gives investors clarity without surrendering sovereignty -- but the political balance between Caracas, Washington, and other global actors remains fragile. What is clear, however, is that the combination of vast reserves, renewed international interest, and a rare moment of geopolitical alignment has given Venezuela its first genuine opening in a generation. Whether it becomes a turning point or another false dawn will depend on how quickly the country can convert this window of opportunity into durable, investable reality.
By Simon Watkins for Oilprice.com
