Venezuela could raise oil production by 200,000 to 300,000 barrels per day (b/d) in the coming months if upstream investment resumes under the right conditions, according to a January 6 report by Wood Mackenzie, a global research and consultancy group.
The report examined Venezuela’s regime change and its implications for oil production, crude, and product markets.
The report said output could increase quickly because many existing wells are dormant and “require only basic workover,” which “could be funded from export cash flows”. This would allow operators, including state-owned PDVSA, to move faster than in a full-field redevelopment scenario.
“We expect production could ramp up by an additional 200,000 to 300,000 b/d in the coming months,” the report stated.
However, Wood Mackenzie cautioned that several constraints remain. These include “the limited capabilities of a much-degraded service sector, the lack of above-ground security, potential repairs or debottlenecking of infrastructure, and access to diluent.”
The consultancy said restoring production to more than two million b/d, last achieved in 2016, would require far more capital. That investment would be difficult to secure given “a highly uncertain political and legislative environment” following years of US sanctions.
Cost structures also present a barrier. Wood Mackenzie noted that new heavy oil projects in the Orinoco Belt remain expensive, with breakeven prices for key Junin and Carabobo projects averaging above US$80 per barrel Brent. It said fiscal terms and project plans would need major changes to attract international oil companies.
‘No disruption’ to Guyana’s offshore operations amid Venezuela tension | OilNOW
Historical experience adds to the caution. “It took the best part of a decade for Libyan oil production to recover after the death of Gaddafi,” the report said, noting that Libya’s output is still below 2010 levels.
Venezuela’s upstream sector currently includes partnerships with Chinese, Russian, Indian, and European companies, while the corporate landscape is complicated by unresolved arbitration awards linked to past nationalisations.
Among foreign producers still operating, Chevron is the largest producer outside PDVSA, followed by Repsol, CNPC and Eni. Several others who exited the country retain experience and may consider returning if conditions improve.
Wood Mackenzie said some companies “will be motivated to return or enter if the right above-ground conditions come into place,” but warned that a rapid near-term ramp-up would not automatically translate into long-term recovery.
