Venezuela’s efforts to increase oil production are being constrained by deteriorating infrastructure and persistent political risk, even as reforms and renewed investment interest emerge, according to an April 27 analysis by Wood Mackenzie.
The report noted that while the government has moved to open the sector to private participation and adjust fiscal terms, structural challenges continue to weigh on recovery prospects.
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The firm said that years of underinvestment have left upstream assets, service capacity, and facilities in weakened condition.
“There are still significant hurdles to be overcome to deliver material increases in Venezuela’s production. Oil infrastructure and reservoirs have been degraded, and in some cases will need extensive restoration. Political risk remains a factor, as shown by recent protests over pay and pensions,” the report said.
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Recent policy changes have altered the operating landscape. Reforms approved by Venezuela’s National Assembly allow private companies to take operational and commercial control of projects and access arbitration, while reducing the state’s exclusive role through Petróleos de Venezuela, S.A. (PDVSA).
International oil companies have already outlined expansion plans under the new framework. Chevron has indicated it could raise production by up to 50% within 18 to 24 months, while Repsol is targeting a similar increase within a year and a potential tripling over three years. Chevron has also increased its stake in key heavy oil ventures in the Orinoco Belt as part of its repositioning in the country.
According to Wood Mackenzie, production has shown some recovery following the easing of U.S. sanctions. Output rose from about 900,000 barrels per day (b/d) in January to approximately 1.1 million b/d in March, reflecting early gains from renewed activity and improved market access.
However, Wood Mackenzie cautioned that near-term increases are likely to come from restoring existing capacity rather than sustained long-term growth.
