Venezuela’s Oil Comeback Could Cost More Than $100 Billion
What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… The Trump Administration is touting the new oil order in Venezuela as a tremendous opportunity for reviving the industry in the world’s biggest crude oil resource holder.
The U.S.-led restructuring of the sector kicked out Russian and Chinese companies out of previously awarded concessions, and spurred a flurry of oil deals with oil majors, the biggest oilfield service providers, and relatively unknown newcomers—all with the purpose of boosting Venezuela’s oil production and exporting a large part of it to the United States.
The deals include one with privately held oil company North American Blue Energy Partners (NABEP)announcedby the White House last month as “the biggest oil deal in world history.” This deal could involve $100 billion in investment in new oil infrastructure after the new interim Venezuelan authorities granted NABEP 100-year concessions for 17 oil fields with proven reserves of approximately 65 billion barrels.
NABEP, led by Venezuela-born businessman Alejandro Betancourt,saysit is looking “to rapidly expand its operations in Lake Maracaibo and the Orinoco Belt with the near-term goal of increasing production to more than 1 million barrels of oil per day.” “NABEP’s $100 billion figure represents a long-term funding requirement, not committed near-term capital, and the company has not disclosed a detailed financing structure,” intelligence firm Rystad Energysaid.Related: China Could Cut Fuel Exports in October as Inventories Plunge “Rystad Energy favors investment programs tied to established operators and defined assets over larger ambitions requiring substantial external capital.” Venezuela’s current oil production is about 1.25 million barrels per day (bpd).
This is set to rise to around 1.6 million bpd by 2028 and 1.8 million bpd by 2030.
Then, by 2035, Venezuela’s crude oil production is expected to jump to around 2.58 million bpd, as greenfield developments will add to the current brownfield-led output growth in the near term, according to Rystad Energy’s upside scenario.
Venezuela certainly has the resource, but decades of mismanagement and infrastructure collapse at oil sites will need much more investment than the ones needed to reactivate rigs.
As of August, when the “biggest oil deal in history” was announced, Venezuela had just two active drilling rigs, per Baker Hughes data.
To reach Rystad’s projections of 1.6 million bpd output by 2028 and 1.8 million bpd by 2030, activity would need to reach around 50 rigs by 2028 and nearly 80 by 2030.
“A number of newly identified opportunities were previously associated with Russian and Chinese operators, and further restructuring of some legacy positions remains possible as the new contractual framework develops,” said Radhika Bansal, Senior Vice President, Oil and Gas, at Rystad Energy.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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