Venezuela, the country with the largest proven oil reserves in the world, continues to experience a rapid decline in output, reaching just around 300,000 b/d at the start of July – the lowest in several decades.
The United States Congressional Research Service says for more than a decade, the US has imposed sanctions in response to activities of the Venezuelan government and Venezuelan individuals. “In response to the authoritarian leadership of Nicolás Maduro, the Trump Administration has significantly expanded these measures. As of June 1, 2020, the Treasury Department has imposed sanctions on at least 144 Venezuelan or Venezuelan-connected individuals, and the State Department has revoked the visas of hundreds of individuals and their families.”
The Trump Administration has also imposed sanctions on Venezuela’s state oil company (Petróleos de Venezuela, S.A., or PdVSA), government, and central bank.
All this has served to cripple the country’s oil and gas industry and economy forcing it to import gasoline as widespread fuel shortages have continued unabated.
Meanwhile, its neighbour Guyana, the newest oil producer in Latin America and the Caribbean, stands to benefit immensely from multi-billion-barrel oil resources discovered off of its coast and even new opportunities being presented by Venezuela’s production decline.
Junior partner at the Orinduik Block, Eco Atlantic Oil and Gas, recently said the heavy oil which has been discovered at the Joe and Jethro wells is now taking on a new attractiveness with the decline in Venezuela’s output.
“…The outlook for (heavy) oil going from 2024 onwards is very promising. Many Gulf Coast and European and Chinese refineries are very thirsty for this kind of heavy oil and we see a narrowing supply due to the sanctions on Venezuela…We therefore forecast that the price for heavy oil will get better and better,” Eco Atlantic CEO, Gil Holzman said.
But Guyana is now facing its own uncertainties which analysts believe if not resolved soon, could see the new oil producing country potentially ending up with a similar fate to its western neighbour. Several countries including the United States have insisted that results from an election that took place since March 2 be declared based on the outcome of a 33-day recount that ended in June. The US has signaled that should a government be installed that is not reflective of the will of the people, sanctions would follow. In fact, recent comments from Secretary of State, Mike Pompeo, suggests the US may already be actively looking at this option.
“I have instructed my Department to ensure that those who undermine Guyana’s democracy are held accountable,” Pompeo said on July 1.
Despite the current circumstances, Guyana has remained a favourable investment destination for oil and gas and the offshore activities have continued largely unaffected, despite recent slowdowns in drill operations due to COVID-19-related measures.
Consultancy group Wood Mackenzie has projected that the country will hit the 1 million b/d mark by the end of the decade.
All that is needed now is for the country to resolve its internal strife and choose a path that brings hope and prosperity to its population of just over 750,000 people.