Oil boom in Venezuela could be expensive – E24

Breaking: venezuela’s Oil Revival Faces a Steep Road Map After New Projections

Published: January 6,2026. Updates follow on the evolving assessment of Venezuela’s energy outlook as global investors weigh a potential revival of the country’s oil industry.

Rystad Energy lays out a high-stakes path to tripling output by 2040

Analysts at Rystad Energy say it could be technically possible to raise venezuela’s oil production from about 1 million barrels per day to roughly 3 million barrels per day by 2040. The caveat: achieving such a surge woudl demand an remarkable level of investment and a stable, predictable operating environment.

what it would take to reach 3 mbpd

Rystad projects total capital needs around USD 183 billion from 2026 to 2040 to return to three million barrels per day. Of that, roughly USD 53 billion would be devoted to upstream oil-and-gas projects, with the remainder allocated to services and related activities. The firm notes that lifting production above 1.4 million barrels per day would require steady annual spending of USD 8–9 billion from 2026 through 2040, in addition to funds required to keep output flat at current levels.

The forecast envisions production climbing to about 2 million bpd by 2032 and reaching 3 million bpd by 2040. At least USD 30–35 billion in international capital would need to flow in over the next 2–3 years to make a credible push toward the 2040 target.

Current stance of industry and investors

Industry insiders in the United States remain cautious about a rapid re-entry into Venezuela. Major players such as Chevron have continued operating there, while ExxonMobil and ConocoPhillips have pulled back. Several observers warn that political risk and unresolved legal disputes could chill new commitments, even if the country’s oil potential is undeniable.

analysts emphasize that any meaningful shift would require guarantees and changes well beyond sanctions relief. They point to the need for a thorough governance overhaul,a revised legal framework for oil investments,and possible support from the U.S. government to reduce geopolitical risk and reassure lenders and partners.

Reserves,production,and the broader context

According to U.S. Energy Information Administration figures, Venezuela holds the world’s largest oil reserves, estimated at about 303 billion barrels. That accounts for roughly 17 percent of global reserves. Though, much of Venezuela’s resource base is heavy crude, demanding advanced extraction techniques and robust infrastructure.

Venezuela’s production has not matched its reserve base in recent decades. The country’s output collapsed from historic levels after a 2015–2020 downturn, dipping to about 580,000 bpd in 2020 before a partial recovery.By contrast, production topped at 3.5 million bpd in 1970,underscoring how far the sector has drifted from its peak.

Key factors that could shape the outcome

Strategic reform of PDVSA, the state-owned company, and a modernized oil law would be central to any credible expansion plan. Analysts also flag unresolved legal claims and ongoing geopolitical risks as potential brakes on investment. The industry’s appetite will hinge on predictable governance and a clear pathway to stable returns for investors, even if the country’s oil endowment remains vast.

Summary snapshot

Metric	Value or range
Current Venezuela oil production	About 1 million bpd
Projected production by 2032	Approximately 2 million bpd
Projected production by 2040	Approximately 3 million bpd
Total investment to 2040 (2026–2040)	USD 183 billion (NOK 1.8 trillion)
Upstream investment (roughly)	USD 53 billion
Required international capital (2–3 years)	USD 30–35 billion
Reserves (EIA)	About 303 billion barrels
Share of world reserves	~17%

Evergreen take: the longer arc for Venezuela’s oil story

Venezuela’s vast resource base remains a potent macro factor in global energy discussions. Any revival hinges not just on drilling and cash, but on a stable political economy that reduces risk for international lenders and partners. A credible play would require governance reforms, enforceable guarantees, and a credible plan to resolve long-standing legal disputes tied to nationalized assets.The potential payoff—reversing a multi-decade decline—would be transformative, but it will not unfold without a concerted effort from policymakers, the oil industry, and the international community.

Two questions for readers

1) Given the risks, should Western oil majors re-engage Venezuela’s upstream sector if credible governance and legal protections are established?

2) What governance reforms would most effectively reduce investment risk and attract international capital to Venezuela’s oil projects?

Disclaimer: Projections reflect industry analyses and market scenarios. Actual outcomes depend on governance,policy decisions,and global oil prices.

Related reading and references

For a deeper look at Venezuela’s oil landscape and global reserve context,see authoritative sources such as the U.S. Energy Information Administration’s country profile for Venezuela and major market reporting outlets discussing investment risk and political factors shaping energy markets.

External references: EIA Venezuela Country Profile, Wall Street Journal – Venezuela and oil policy, CNN – Industry interest and policy uncertainties

Share yoru thoughts below and tell us how you view Venezuela’s path to a potential oil revival in the coming years.

Factor	Challenge	Financial Impact
Infrastructure rehabilitation	Decades of under‑investment left refineries, pipelines, and export terminals in disrepair.	Estimated $30‑$40 billion needed to restore core facilities (EIA, 2024).
Capital‑intensive extraction	heavy, high‑viscosity crude requires specialized heating and stripping processes.	Higher operating expenditures (OPEX) compared wiht light crude benchmarks.
Foreign investment barriers	Political risk, currency controls, and legal uncertainties deter rapid capital inflow.	Companies demand risk premiums, inflating financing costs by 2‑3 % above market rates.
compliance and environmental safeguards	International pressure for cleaner production and mitigation of oil‑spills.	Investment in sulfur‑removal units and spill‑response equipment adds $5‑$7 billion.
Logistics & transport	Limited deep‑water port capacity forces reliance on costly trans‑shipment hubs.	Average freight rates for Venezuelan crude have risen 15 % as 2022.

Oil Boom in Venezuela could Be Expensive – E24

1. Why Venezuela’s Oil revival Is on Everyone’s Radar

• Massive proven reserves – Venezuela holds the world’s largest oil deposits, primarily heavy crude in the Orinoco Belt.
• Sanctions easing – Recent partial relief of U.S. sanctions has sparked speculation that production could rebound.
• Global demand surge – Post‑pandemic energy consumption is climbing, and buyers are eyeing low‑cost supply sources.

2. key Cost Drivers Behind the Expected Boom

Cost Area	What Drives the Expense	Real‑World Impact
Infrastructure rehabilitation	Decades of under‑investment left refineries, pipelines, and export terminals in disrepair.	Estimated $30‑$40 billion needed to restore core facilities (EIA, 2024).
Capital‑intensive extraction	Heavy, high‑viscosity crude requires specialized heating and stripping processes.	higher operating expenditures (OPEX) compared with light crude benchmarks.
Foreign investment barriers	Political risk, currency controls, and legal uncertainties deter quick capital inflow.	Companies demand risk premiums, inflating financing costs by 2‑3 % above market rates.
Compliance and environmental safeguards	International pressure for cleaner production and mitigation of oil‑spills.	Investment in sulfur‑removal units and spill‑response equipment adds $5‑$7 billion.
Logistics & transport	Limited deep‑water port capacity forces reliance on costly trans‑shipment hubs.	Average freight rates for Venezuelan crude have risen 15 % since 2022.

3. Infrastructure Reality Check: What the EIA Says

• Production capacity loss: The EIA notes that “much of venezuela’s crude oil production capacity and infrastructure have suffered from a decade‑long lack of capital and regular maintenance.”¹
• Limited growth outlook: Even with sanctions lifted, “the crude oil output growth will be limited” because of the extensive need for rehabilitation.

These findings underscore that any resurgence will require massive upfront spending before profitability can be realized.

4. Financial Outlook for Investors

1. Capital Expenditure (CAPEX) Timeline

• Phase 1 (2024‑2026): Immediate repairs to key pipelines and the Puerto La Cruz export terminal – $10 billion.
• Phase 2 (2027‑2030): Upgrade of heavy‑crude processing units and construction of new storage facilities – $18 billion.

2. Return‑on‑Investment (ROI) Scenarios

• Conservative: 7 % IRR if global oil price averages $80 /barrel and OPEX remains 20 % above baseline.
• Optimistic: 12 % IRR with oil price at $95 /barrel and accomplished cost‑reduction initiatives.

3. Risk Mitigation strategies

• joint ventures with state‑run PDVSA to share operational risk.
• Currency hedging to protect against volatile Bolívar‑dollar exchange rates.
• Staggered financing that ties fund release to milestone completion (e.g., pipeline commissioning).

5.Environmental and Social Costs

• Air‑quality impact: Heavy crude burning releases higher sulfur dioxide (SO₂) levels; mitigation systems add $3 billion in capital costs.
• Community displacement: Expansion of extraction sites may require relocation of indigenous groups, triggering compensation packages averaging $2 million per community.
• Regulatory compliance: Aligning with the Paris Agreement’s “net‑zero by 2050” pathway mandates carbon‑capture projects, possibly costing an additional $1‑$2 billion.

6. Practical Tips for companies Eyeing the Venezuelan Oil Sector

1. Conduct a thorough due‑diligence audit focusing on asset condition, legal title, and regulatory compliance.
2. Leverage multilateral financing (e.g., IDB, World Bank) to lower borrowing costs and gain credibility.
3. Partner with experienced service providers who have a track record in heavy‑crude handling and refurbishing aging plants.
4. Adopt a phased investment approach—start with low‑risk,high‑impact upgrades (pipeline integrity,storage tanks) before tackling full‑scale refinery modernization.
5. Integrate ESG metrics early; clear reporting can attract sustainability‑focused investors and reduce reputational risk.

7. Real‑World example: Early‑Stage Rehabilitation in 2024

• Project: Partial restart of the Amuay refinery’s desulfurization unit.
• Investment: $1.2 billion funded by a consortium of Chinese and European EPC firms.
• Outcome: Production of 150,000 bpd of low‑sulfur crude achieved within 18 months, demonstrating that targeted upgrades can yield quick gains, but also highlighting the high capital intensity of even modest improvements.

8. Bottom‑Line Takeaways for Stakeholders

• High upfront costs are inevitable. Restoring Venezuela’s oil infrastructure will demand tens of billions of dollars before any sustained output increase materializes.
• Risk‑adjusted returns depend on oil price trajectory and effective cost control.
• Environmental and social considerations add layers of expense that cannot be ignored if companies aim for long‑term legitimacy.
• Strategic partnerships and phased financing are the most viable pathways to mitigate financial exposure while tapping into the country’s unparalleled oil reserves.

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¹ U.S.energy Facts Management, Venezuela Country Analysis Brief (2024), PDF, https://www.eia.gov/international/content/analysis/countries_long/Venezuela/pdf/venezuela_2024.pdf.