Venezuelan Oil Exports Grow to Largest in Four Years After U.S. Eases Sanctions

That is the biggest average production rate since 2020 for Petróeos de Venezuela, S.A., the country’s state-owned oil company.

Despite having the world's largest proven oil reserves of any nation, Venezuela has struggled to get the oil out of the ground and to markets, especially since Hugo Chavez trashed the country's oil industry and the U.S. imposed sanctions. Maduro has been making slow but steady progress at converting his country's black goo into cold hard cash. 

Most of that output is still shipping to China, which buys 65% -- just under two-thirds – of all the oil Venezuela exports. Diversification now made possible thanks to the sanctions cutback allowed 19% of the country’s oil to ship to the United States. In third place was the European continent, which bought 4% of the country’s oil last year, followed by several Latin American countries which took in even smaller percentages. With India having invested in Venezuela's oil industry, exports to India are expected to grow rapidly in the future.

The rate of that production is going up as well. According to a report just released by the Organization of Petroleum Exporting Countries (OPEC), Venezuela shipped an estimated 786,000 bpd of oil in December. The country’s own estimates were slightly higher, at 802,000 bpd for the month, a difference which is minimal and could be simple differences in accounting methods.

The most severe sanctions the United States levied on Venezuela began in 2017, in retaliation for the country’s government prior forcible acquisition of facilities owned by U.S. companies and political and economic trade alignment of the government with countries the U.S. deemed undesirable, such as Russia and Iran. Those sanctions included outright embargoes against Venezuela being allowed to ship its oil to most nations, plus parallel sanctions against shipping companies which alleged to be working with PDVSA. The sanctions were serious enough that most foreign ventures which had been working with PDVSA were forced to back out of those arrangements.

The sanctions began to ease in 2022, when the Team-Biden on two occasions agreed to authorize licenses for Chevron Corporation, Repsol from Spain, and Eni from Italy. The deal allowed the companies to receive that oil in return for them cancelling some of their outstanding debt claims against the country of Venezuela.

Further easing of U.S. sanctions took place in October 2023.

Besides allowing Chevron to begin to use its facilities and seized assets again, Venezuelan oil export growth benefited after Global Energy, a privately-held enterprise, upgraded and repaired oil wells located in the country’s Orinoco Oil Belt.

Venezuela will also soon benefit from natural gas to be piped to Trinidad and Tobago’s National Gas Company from the Dragon Oil Field off the Venezuelan coast. Royal Dutch Shell is the operating partner working with the developers on this project.

Another deal which the Caracas government and PDVSA have cut, with India’s ONGC Videsh Limited (OVL), the foreign operations part of that country’s state-owned Oil and Natural Gas Corporation (ONGC), will also soon produce benefits once the terms and conditions are negotiated and signed.

Shipments in this case will also be made to offset outstanding debt owed to OVL as part of the final contract terms. OVL currently still owns a 40% share of the rich San Cristobal Venezuelan oil reserves field, with the government’s PDVSA owning the other 60%. Opening up the contract again will settle some of the past debts connected with this ownership, and potentially restart shipments to India eventually at close to the 300,000 barrels per day India used to buy from Venezuela.

Venezuelan President Nicolás Maduro announced much of this, in conjunction with Pedro Tellechea, the country’s Oil Minister, during Maduro’s annual address to his people on January 15.

“PDVSA, although sanctioned, demonstrated the strength of its internal capabilities that led to overcoming the adversities created by the illegitimate [U.S. sanctions and oil blockade] and by mafias that had infiltrated the industry,” Maduro said.

He noted that oil activity of all kinds grew by 12.99% in the third quarter. That, coupled with a 14.60% increase in extraction rates of crude and natural gas from the country’s oil fields, helped drive a 60.46% increase in exports.

Maduro went on to note that PDVSA saw its total revenues for the year rise to U.S. $6.2 billion, a dramatically higher number than the $3.5 billion in revenue delivered in 2022.

He also reported that the Venezuelan economy grew overall by 5% in 2023. With an estimated 27% increase in oil revenues expected this year via all sources, Maduro’s economists believe the country will grow by a net 8% for 2024 as a whole. 

Maduro did not mention the inflation last year of 183%.