LONDON – Although various IOCs remain in Venezuela, none are investing in the country’s oil and gas sector in a meaningful manner at present, according to GlobalData.
Oil & gas analyst Adrian Lara said that even though some companies might prefer a change of regime, the industry in Venezuela would still take many years to recover.
“The country’s hydrocarbon sector has suffered from chronic underinvestment for years, with noteworthy kicks including 2019, when the US government-imposed sanctions on the country’s oil trade - its main source of revenue. This has effectively restricted the exporting capabilities of the country, created operational bottlenecks and left the Venezuelan government, and its NOC PDVSA, with fewer and fewer means to invest in the sector.
“The outcome of all these events has been a continuous oil production decline since 2015, with a historic low output in May, reported at 570,000 b/d…”
Although exports to China and India compensated last year from the loss of US buyers due to sanctions, Lara continued, in 2020 lower demand for crude worldwide and a tightening of sanctions have reduced the country’s export capability to its worse level to date.
Lower exports have in turn led to an increase in the storage capacity usage, which at peak can hold less than 40 MMbbl.
“As for natural gas, there were some promising projects announced to develop Venezuela’s vast offshore reserves. In fact, during the last five years. negotiations between the Venezuelan government with Russia’s and Trinidad and Tobago’s counterparts had put these projects back on track.
“However, after a worsening of the political and economic climate of the country these projects are currently on hold.”