A massive transformation and cash injection is needed to revive and rebuild Venezuela's ailing oil and natural gas industry, panelists said March 12 during CERAWeek by IHS Markit in Houston.
At the end of January, to put pressure on Venezuelan President Nicolás Maduro's regime to abandon power, the Trump administration imposed sanctions on state-owned Petróleos de Venezuela SA, or PDVSA.
"We need to open up the oil industry to private investment without the participation of the national oil company," said Ricardo Hausmann, director at the Center for International Development, and a professor at the Practice of Economic Development at the John F. Kennedy School of Government at Harvard University.
PDVSA's oil revenues account for more than 90% of the country's export earnings, according to data from OPEC. Venezuela exported approximately 1.6 million barrels per day in 2017, with the U.S. a key destination for its oil.
From January through October 2018, Venezuela accounted for approximately 495,000 barrels per day, or roughly 10%, of heavy crude oil imports into the U.S., according to data from the U.S. Energy Information Administration.
About 176,000 bbl/d of crude oil is shipped to refineries controlled by PDVSA subsidiary CITGO Petroleum Corp., CITGO 's newly appointed chairwoman, Luisa Palacios, said.
CITGO owns refineries in Texas, Louisiana and Illinois that represent a total capacity of 749,000 bbl/d.
Although the loss of the oil imports from Venezuela were a "shock" to CITGO, the company can "weather" the storm and has been working on contingency plans in the last month. However, the U.S. sanctions remain an issue for the market as a whole.
"This is, by no means, only a CITGO problem," Palacios said.