History of The Venezuelan Oil Industry - Today and The Future

Today and The Future

Today, Venezuela is the fifth largest oil exporting country in the world with the second-largest reserves of heavy crude oil (after Canada). Canada and Venezuela have significant potential for capacity expansion; Venezuela could potentially increase production capacity by 2.4 Mbbl/d (380,000 m3/d) from 2001 level (3.2 MMbpd) to 5.6 MMbpd by 2025 - although this would require significant amounts of capital investment by national oil company PDVSA. By 2010, Venezuelan production had in fact declined to ~2.25 Mbbl/d (358,000 m3/d). PDVSA have not demonstrated any capability to bring new oil fields onstream since nationalizing heavy oil projects in the Orinoco heavy oil belt formerly operated by international oil companies ExxonMobil, ConocoPhillips, Chevron and Total.

In 2005, PDVSA opened its first office in China, and announced plans to nearly triple its fleet of oil tankers in that region. Chávez has long stated that he would like to sell more Venezuelan oil to China so his country can become more independent of the United States. The United States currently accounts for 65 percent of Venezuela's exports.

In 2007, Chavez also struck a deal with Brazilian oil company Petrobras to build an oil refinery in northeastern Brazil where crude oil will be sent from both Brazil and Argentina. A similar deal was struck with Ecuador where Venezuela agreed to refine 100,000 barrels (16,000 m3) of crude oil from Ecuador at discount prices. Cuba has agreed to let thousands of Venezuelans be received for medical treatment and health programs, and in turn, Venezuela agreed to sell several thousands of barrels to Cuba at a 40% discount

As of March 2010, PDVSA’s current strategic plan forecasts 5 million barrels per day (790,000 m3/d) for 2015 and 6.5 million barrels per day (1,030,000 m3/d) for 2020 PDVSA’s goal to produce 6.5 million barrels per day (1,030,000 m3/d) by 2020 will likely be harder under Chavez’s policies, which hinder the potential increase of private investment.

Venezuela President Hugo Chávez called expert reports that systematic underinvestment in the Venezuelan oil industry caused the August 2012 explosion at Amuay "irresponsible". The "string of accidents, outages and unplanned stoppages" then continued with a fire started by lightning at the El Palito refinery a month later.