FACTBOX: Venezuela's oil industry is operating after US seizes Maduro

Venezuela's oil industry continued to operate without major disruptions on Jan. 5 after the US launched an attack on the country and removed its president, Nicolas Maduro, on Jan. 3.

However, oil export flows from Venezuela have slowed since mid-December, and production has declined, as the US began ramping up enforcement on sanctioned tankers.

"We are going to run the country," US President Donald Trump said at a Jan. 3 press conference, until there is a "safe, proper and judicious transition."

The news has had little impact on crude prices so far, as growth in Venezuelan output would require billions of dollars in investment.

"Venezuelan production could grow if sanctions are removed, but it would require at least several billion dollars of fresh investment to boost marketed production to 1.5 million b/d in the next 12-24 months — an increase of roughly 500,000 b/d from recent levels (including blended diluent)," said S&P Global Energy CERA Analyst Jim Burkhard. "To expand output even more — to 3 million b/d, for example — would require much greater spending on infrastructure in addition to upstream development costs, and it would take many years. Investment terms — including confidence they will endure — and the oil price environment need to be conducive to such investments."

The following are key facts about the current state of the Venezuelan oil industry:

Infrastructure

Venezuelan oil infrastructure faces multiple challenges, while production capacity remains constrained by years of underinvestment.

• Theoretically, the US can easily remove sanctions on Venezuela, as most US sanctions are imposed by the executive branch and do not require congressional action to remove.
• Venezuela's oil production fell in December as the US intensified enforcement actions on sanctioned vessels.
• Venezuela has some of the largest oil reserves in the world, at approximately 364 billion barrels of oil equivalent, according to S&P Global Energy CERA.
• Venezuela's oil production has fallen from 3 million b/d in January 2008 to roughly 963,000 b/d in December due to a lack of investment in the country's infrastructure.
• Trump said in a Jan. 3 press conference that the US would send oil companies and "spend billions" to fix the oil infrastructure in Venezuela in order to boost production.
• Major investments would be needed to revitalize Venezuela's upstream sector, with about 28,000 inactive wells needing rehabilitation in mature regions, and no reports of exploratory drilling since 2019.
• Venezuela's largest oil fields include 14 supergiant fields, 11 of which still have more than 50% of their reserves.
• Longtime opposition leader Maria Corina Machado was barred from running in Venezuela's 2024 election. Her stand-in, former diplomat Edmundo Gonzalez, was believed by international observers to have won the election with 70% of the vote, but Maduro was declared the winner.
• Trump said at the press conference that he has not reached out to Machado, adding that she "doesn't have the respect" in her country.
• Venezuela's former Vice President, Delcy Rodriguez, was sworn in as acting president on Jan. 5.
• Venezuela's state oil company, PDVSA, and its partners had been able to maintain production through joint ventures with Chevron and the reactivation of wells in some fields operated by private companies in Zulia state under PDVSA's production and participation contracts.
• "Chevron remains focused on the safety and well-being of our employees, as well as the integrity of our assets," Bill Turenne, Chevron's Head of Public Policy Communications, said in an email to Platts. "We continue to operate in full compliance with all relevant laws and regulations."
• The Venezuelan National Assembly authorized a 15-year extension for the joint ventures Boquerón and Petroperijá to continue oil activities from 2026 to 2041, in the plenary session held on Nov. 20.
• Venezuela's refining system consists of four large refineries with a combined capacity of 1.3 million b/d, but those refineries are operating well below capacity.

Prices

An increase in Venezuela's crude production or exports would likely affect the price differentials for heavy crude.

• Heavy crude prices have weakened recently. For instance, Platts assessed Western Canadian Select crude at Nederland, Texas, at a $6.40/b discount to West Texas Intermediate crude on Jan. 5, widening from an average of $3.21/b in October, Platts data shows.
• Platts assessed Colombian Castilla crude at a $4.51/b discount to WTI on Jan. 5, widening from a $2.09/b average in October.

Trade flows

Chinese independent refiners, the primary buyers of Venezuelan crude, could face supply disruptions if production and exports are impacted.

• Suppliers have suspended offers of Venezuelan heavy crude to China's independent refineries following US intervention in Venezuela, while the cargoes currently en route to China are expected to only sustain the refiners' production until March.
• The US assault on Venezuela may lead to a short-term boost in Asian demand for heavy sour crudes of similar quality to Venezuelan crude.
• As of Jan. 5, there were six laden crude tankers anchored near Venezuela's main oil port at Amuay Bay and the Cardon refining complex in western Venezuela, according to S&P Global Commodities at Sea.
• The number of laden tankers anchored in the area climbed in recent months, up from an average of one to two laden tankers through the year to four to eight in December-January.
• Three vessels are currently headed to the US: the Ionic Anassa, Nave Cosmos and Jose Progress, CAS data shows.
• Venezuela exported 670,000 b/d of crude in December, down from 922,000 b/d in November, CAS data shows.
• Venezuela exported 184,000 b/d of crude to the US in December, down slightly from 159,000 b/d in November, CAS data shows.
• Trump on Dec. 16 ordered a "total and complete blockade" of sanctioned oil tankers to and from Venezuela, escalating pressure to remove Maduro from power.
• The move followed the US seizure of the oil tanker Skipper on Dec. 10 and subsequent sanctions against six shipping companies and tankers operating in Venezuela's oil sector.
• An oil tanker that the US attempted to seize near Venezuela has popped up in the North Atlantic with a new name and a Russian flag after it fled US authorities and stopped broadcasting its location weeks ago.