Current State of Venezuela’s Oil Industry: Resilience Amidst US Sanctions
June 9, 2025 Hour: 5:24 pm
Venezuela, home of one world’s largest oil reserves, has long been a key player in the global energy market. However, years of U.S. led economic sanctions have severely impacted its oil sector, restricting production, exports, and foreign investment.
Despite these challenges, the Venezuelan government has maintained a steadfast commitment to revitalizing its oil industry while simultaneously pushing for economic diversification to reduce dependency on hydrocarbon revenues.
Recent statements from Venezuelan officials, including Executive Vice President and Minister of Petroleum Delcy Rodríguez, highlight the country’s determination to overcome these obstacles.
At events such as Expo Fedeindustria 2025 and the World Retail Congress 2025, Rodríguez emphasized Venezuela’s ability to sustain oil production despite sanctions, while also stressing the urgent need to diversify the economy.
This analysis explores Venezuela’s current oil production levels, the impact of U.S. sanctions, the government’s strategies to maintain output, and the broader economic implications of falling oil prices. Additionally, we examine Venezuela’s geopolitical alliances and future prospects in a changing global energy landscape.
Venezuela’s Oil Production in 2025: Defying Sanctions
Current Production Levels and Key Projects
Despite ongoing sanctions, Venezuela’s oil production has shown remarkable resilience. According to official reports:
- First Quarter of 2025 average production reached 1.035 million barrels per day (bpd), a 5.3% increase compared to the last quarter of 2024 (982,000 bpd).
- In January production surpassed 1.031 million bpd, marking a significant milestone.
- On February, output remained strong at 1.058 million bpd, the highest level since mid-2019.
- For May production, including condensates and gas liquids, stood at 1.081 million bpd.
Key oilfields contributing to this output include:
- Petro Anzoátegui, Junín, and Cardón Cuatro – Operating at full capacity.
- Petroboscan (Chevron joint venture) – Producing 103,000 bpd.
- Petropiar (Chevron joint venture) – At 109,000 bpd.
- Petroquiriquire (Repsol joint venture) – Contributing 40,000 bpd.
The Impact of U.S. Sanctions on Production
The U.S. government’s decision to revoke General License 41A, which allowed Chevron to operate in Venezuela, has introduced new uncertainties.
However, Rodríguez affirmed that joint ventures with Repsol, Eni, and Maurel & Prom continue in “full production,” despite the expiration of U.S. licenses on May 27, 2025.
Venezuela’s legal stance remains firm, foreign companies must comply with national laws, not U.S. sanctions. Rodríguez criticized the sanctions as an “illegal blockade” aimed at devaluing Venezuela’s energy assets.
She argued that these measures are part of a broader strategy to control Venezuela’s resources, which the government vehemently opposes.
Challenges in Maintaining Production
While production has stabilized, several challenges persist: declining investment due to sanctions; aging infrastructure requiring modernization; limited access to advanced technology for deepwater and heavy crude extraction.
To counter these challenges, Venezuela has implemented a multi-pronged strategy focused on maximizing output from existing joint ventures with international partners like Repsol and Eni.
Prioritizing maintenance and upgrades of key refineries such as the Paraguaná Refining Complex to improve operational efficiency. And actively exploring alternative markets in Asia and BRICS nations to reduce dependence on U.S.-dominated trade channels.
This approach aims to sustain oil production levels while circumventing the constraints imposed by international sanctions, ensuring continued revenue streams and maintaining Venezuela’s position in the global energy market despite external pressures.
The government has particularly emphasized strengthening energy partnerships with China and India, while simultaneously working to modernize domestic infrastructure and optimize production from currently operational fields through improved technology and workforce initiatives.
Economic Challenges: Falling Oil Prices and the Need for Diversification
The Decline in Global Oil Prices and Its Impact
Venezuela’s economy remains heavily reliant on oil revenues, making it vulnerable to price fluctuations. Recent data shows:
- 24.4% drop in crude prices from December 2024 to June 2025.
- Venezuela’s Merey crude fell from $74.91 per barrel (2024 average) to $61.10 in March 2025 (–18.43%).
- OPEC+ market instability due to U.S. tariff policies and reduced global demand.
This decline has strained Venezuela’s fiscal stability, as oil exports account for over 90% of the country’s foreign currency earnings.
Government Response: Economic Diversification Efforts
While oil remains central to Venezuela’s economy, Rodríguez has repeatedly called for diversification. Key non-oil sectors showing growth include:
- Mining: +13.46% (gold, diamonds, and coltan).
- Retail & Services: +8.23% (contributing 4.5% to GDP).
- Manufacturing: +5.77% (food processing, textiles, and construction materials).
The government’s broader strategy involves:
- Strengthening agriculture (to reduce food imports).
- Expanding gas and petrochemical production (to add value to energy exports).
- Boosting tourism and technology sectors (to attract foreign investment).
However, Rodríguez acknowledged that without a strong oil recovery, sustained economic growth remains difficult.
Venezuela’s Geopolitical Strategy: BRICS and New Alliances
Strengthening Ties with BRICS Nations
Facing U.S. sanctions, Venezuela has turned to BRICS (Brazil, Russia, India, China, South Africa) and other allies for trade and investment.
Key developments include: increased oil exports to China and India, bypassing U.S. financial systems; technical support from Russia and Iran in refining and exploration; joint ventures with Asian and Middle Eastern firms to develop the Orinoco Belt.
Rodríguez emphasized that Venezuela will only engage in partnerships based on mutual respect and fair payment for resources, rejecting what she called “neo-colonial” exploitation.
Latin American Energy Integration
Venezuela is also deepening ties with regional partners:
- Petrocaribe agreements (providing discounted oil to Caribbean nations).
- Gas pipeline projects with Colombia and Brazil.
- Participation in OPEC+ discussions to stabilize oil markets.
These efforts aim to reduce dependency on the U.S. dollar and create alternative trade mechanisms.
Can Venezuela Sustain Oil Production Growth?
Venezuela faces significant challenges in sustaining its current oil production growth amid ongoing U.S. sanctions and global market volatility.
The government has set ambitious targets to reach 1.5 million barrels per day by the end of 2025, up from the current production level of approximately 1.08 million barrels.
Achieving this goal will require overcoming substantial obstacles, including limited foreign investment due to sanctions, the recent withdrawal of Chevron from joint ventures, and fluctuating global oil prices that directly impact revenue streams.
Key to Venezuela’s strategy is the expansion of production at fields like PetroZamora, which aims to nearly double its output by December 2025.
The government is also focusing on modernizing refining capacity, with plans to significantly increase asphalt production at the Paraguaná Refining Complex.
These efforts are supported by ongoing certification of new oil reserves and technological improvements through INTEVEP, Venezuela’s petroleum research institute, which could help reduce production costs and enhance efficiency.
However, the long-term sustainability of Venezuela’s oil sector remains uncertain without a resolution to U.S. sanctions. While partnerships with BRICS nations provide alternative markets and investment sources, the lack of access to advanced Western technology and capital continues to hinder full recovery.
The country’s ability to maintain production growth will ultimately depend on both geopolitical developments and its success in implementing domestic reforms to optimize the energy sector amid challenging economic conditions.
Sovereignty vs. Sanctions
Venezuela’s oil industry has proven resilient despite immense external pressures. The government’s dual focus, maintaining oil production while diversifying the economy, reflects a long-term vision to reduce dependency on hydrocarbons.
However, the lifting of U.S. sanctions remains crucial for full recovery. Until then, Venezuela will continue leveraging its BRICS alliances, domestic innovation, and worker resilience to sustain its energy sector.
As Rodríguez stated: “Venezuela does not need permission to develop its oil production.” The world want to see if this defiance translates into lasting economic stability.
Author: Silvana Solano
Source: teleSUR
