Rystad Energy has adjusted its expectations for Venezuela’s short-term crude output growth, expressing reservations about the nation’s production trajectory given the current global oil market dynamics. Despite earlier predictions of a 200,000 barrels per day (b/d) expansion following the lifting of sanctions in October 2023, recent data from the Organization of Petroleum Exporting Countries (OPEC) and Venezuela’s oil ministry prompted a reassessment. Rystad Energy now anticipates a more conservative 115,000-120,000 b/d increase from October 2023 to April 2024.
The potential reimposition of sanctions remains a significant concern, with recent legal developments in Venezuela impacting the Joe Biden administration’s willingness to engage in further sanctions relief. Rystad Energy acknowledges that any such reimposition post-April could slow the growth to around 870,000 b/d.
Venezuela’s top court on Jan. 26 closed the door on key opposition candidates running against Nicolas Maduro for the presidency later this year. The Biden administration, in turn, reimposed the sanctions it had eased in a push for free and fair elections in the South American nation. U.S. State Dept. spokesman Matthew Miller on Jan. 29 said the ban violates the Barbados agreement, signed to allow for a level playing field in the upcoming polls. In support of it, the U.S. had issued “General License 44”, allowing relief to Venezuela’s oil and gas sector.
Maduro has until April to decide whether he will hold credible elections or face the wrath of more U.S. sanctions. It would be in his best interest to, since the ease of sanctions helped Venezuela’s economy with its slow mend.
Looking ahead, Rystad Energy’s January scenario envisions a peak in production at 1.1 million b/d in 2025-26, gradually declining to around one million b/d by the end of the decade.
However, the report underscores the need for substantial investment in the hydrocarbons sector to realize these projections. The easing of sanctions, according to Rystad Energy, could potentially result in a 31% increase in crude production over the next four years, but uncertainty looms as companies adopt a wait-and-see approach until April.
Rystad Energy stressed that without a significant influx of investment and political stability, Venezuela’s short-term growth may reach 115,000 b/d, ultimately leveling off at 1 million b/d by the end of 2024.
