Venezuela’s oil sector is facing a significant drop in production, despite having the world’s largest oil reserves and significant natural gas reserves. Decades of mismanagement, lack of maintenance, and US sanctions have led to this decline. The United States has decided to reimpose some sanctions on Venezuela’s oil sector, citing ongoing crackdowns on opposition by President Nicolás Maduro.
Ten years ago, Venezuela was producing 2.9 million barrels of oil per day, but by 2020, production had dropped to just 400,000 barrels per day. With the easing of US sanctions in the first quarter of this year, production increased to 800,000 barrels per day. However, these developments highlight the complex relationship between Venezuela’s oil sector, international partnerships, and the impact of political decisions on production levels.
While major companies like Chevron, Shell, and Repsol had entered into agreements with Maduro’s government and state oil company PDVSA following the easing of sanctions, the US government plans to reintroduce sanctions. These sanctions will not disrupt the existing deal between Chevron and PDVSA. Despite having significant resources in the oil sector, Venezuela continues to struggle with political instability and corruption that affects its ability to produce and export crude oil efficiently.
