- Venezuela is one of the world's largest exporters of crude oil and the largest in the Western Hemisphere. The oil sector is of central importance to the Venezuelan economy. As a founding member of the Organization of the Petroleum Exporting Countries (OPEC), Venezuela is an important player in the global oil market.
- According to Oil and Gas Journal (OGJ), Venezuela had 211 billion barrels of proven oil reserves in 2011, the second largest the world. This number constitutes a major upward revision – last year the same publication listed the country's reserves at 99.4 billion barrels. The update results from the inclusion of massive reserves of extra-heavy oil in Venezuela's Orinoco belt. Venezuela is a significant supplier of crude oil to the world market: in 2009 the country had net oil exports of 1.75 million barrels per day (bbl/d), eleventh-largest in the world and the largest in the Western Hemisphere.
- 1999 - Venezuela adopted the Gas Hydrocarbons Law
- 2007 - The Government nationalizes the fields in the Orinoco Oil Belt
- Venezuela nationalized its oil industry in the 1970s, creating Petroleos de Venezuela S.A. (PdVSA), the country's state-run oil and natural gas company. Along with being Venezuela's largest employer, PdVSA accounts for a significant share of the country's GDP, government revenue and export earnings. In 2002, nearly half of PdVSA's employees walked off the job in protest against the rule of President Chavez, largely bringing the company's operations to a halt. In the wake of the strike, PdVSA fired 18,000 workers – industry analysts speculate that the company never full recovered from the human capital impacts of this move.
- During the 1990s Venezuela took steps to liberalize the petroleum sector. However, since the election of Hugo Chavez in 1999, Venezuela has increased public participation in the oil industry. The Chavez government initially raised tax and royalty rates on new and existing projects and mandated majority PdVSA ownership of all oil projects. In 2009 and 2010 Venezuela nationalized oil field service firms and infrastructure in response to these firms' failure to renegotiate their contracts. Venezuela is also increasing pressure on foreign operators that remain in the country to increase investment to offset recent production declines
- EIA estimates that the country produced around 2.36 million bbl/d of oil in 2010. Crude oil represented 2.09 million bbl/d of this total, with condensates, natural gas liquids (NGLs) accounting for the remaining production. Estimates of Venezuelan production vary from source to source, largely due to measurement methodology. For instance, some analysts directly count the extra-heavy oil produced in Venezuela's Orinoco Belt as part of Venezuela's crude oil production. Others (including EIA) count the upgraded syncrude, which is about 10 percent lower than the volume of the original extra-heavy feedstock. EIA estimates that Venezuela's crude oil production dropped again in 2010, to 2.09 million bbl/d. Natural decline at older fields, maintenance issues, and compliance with OPEC production cuts are behind this trend. Venezuela's OPEC production target is currently 1.99 million bbl/d
- Venezuela's conventional crude oil is heavy and sour by international standards. As a result, much of Venezuela's oil production must go to specialized domestic and international refineries. The country's most prolific production area is the Maracaibo basin, which contains slightly less than half of Venezuela's oil production. Many of Venezuela's fields are very mature, requiring heavy investment to maintain current capacity. Industry analysts estimate that PdVSA must spend some $3 billion each year just to maintain production levels at existing fields, given decline rates of at least 25 percent.
Orinoco Heavy Oil Belt
- Venezuela contains billions of barrels in extra-heavy crude oil and bitumen deposits, most of which are situated in the Orinoco Belt in central Venezuela. According to a study released by the U.S. Geological Survey, the mean estimate of recoverable oil resources from the Orinoco Belt is 513 billion barrels of crude oil. PdVSA began the 'Magna Reserva' project in 2005, which involved dividing the Orinoco region into 27 blocks and quantifying the reserves in place. This initiative resulted in the upgrading of Venezuelan reserve estimates by more than 100 billion barrels.
- In the 1990's Venezuela established four strategic associations to exploit these resources, later converting them to mixed companies with majority PdVSA ownership. These projects involve converting the extra heavy crude and bitumen to lighter, sweeter crude, known as syncrude. The upgrading facilities themselves introduce another element of risk into Venezuela's petroleum supply chain. While the country's four upgraders have installed production capacity of about 600,000 bbl/d of syncrude, industry estimates place these projects' production levels at less that 500,000 bbl/d due to maintenance and safety problems.
- Venezuela plans to further develop the Orinoco Belt oil resources in the coming years. In 2009 Venezuela signed bilateral agreements for the development of four major blocks in the Junin area. Last year the country awarded two more major development licenses in the Carabobo region. Venezuela expects these projects to add more that 2,000,000 bbl/d of heavy oil production capacity by the end of the decade
- Venezuela's petroleum exports have dropped by almost 50 percent, since peaking at 3.06 million bbl/d in 1997. Venezuela sends a large share of its oil exports to the United States because geographic proximity enhances export profitability and because refineries on the U.S. Gulf Coast are specifically designed to handle heavy Venezuelan crude.
- Currently, Venezuela is the United States' fifth largest supplier of imported petroleum.
- However, U.S. imports from Venezuela have declined in recent years. In 2010, the United States imported 987,000 bbl/d of crude oil and petroleum products from Venezuela, just 8.3 percent of total American imports. Even factoring in 255,000 bbl/d of imports from the U.S. Virgin Islands, which are almost exclusively petroleum products refined from Venezuelan crude, the significance of Venezuela to the American energy sector is in decline.
- Petróleos de Venezuela S.A., (PDVSA) the state-owned corporation of Venezuela, is responsible for the efficient, profitable, and dependable exploration, production, refining, transport and commerce of hydrocarbons.
- Chevron is one of the leading private oil companies in Venezuela. In 2010, Chevron's total daily production averaged 101,000 barrels of crude oil (26,000 net), 116 million cubic feet of natural gas (25 million net) and 134,000 barrels of synthetic oil (28,000 net).
- Inpex has a gas business in the Copa Macoya Block and the crude oil business in the Guarico Oriental Block, in partnership with PDVSA
- In recent years, Venezuela has improved its domestic natural gas transport network to allow greater domestic utilization and movement of natural gas production. The Interconnection Centro Occidente (ICO) system connects the central and western parts of the country, making natural gas more easily available for domestic consumers and for re-injection into western oil fields. Upon its scheduled completion on 2011, the ICO will have a capacity of 520 MMcf/d.
- In 2008, the Antonio Ricaurte pipeline came online, connecting Venezuela with Colombia. Initially, the pipeline will allow Colombia to export natural gas to Venezuela, with contracted volumes ranging between 80 and 150 MMcf/d. Current plans then call for the flow of the pipeline to be reversed in 2012, with Venezuela exporting 140 MMcf/d of natural gas to Colombia
- In September 2008, Venezuela signed initial agreements to create three joint venture companies to pursue LNG projects along the northern coast of the country. Each project will consist of a separate liquefaction train with the capacity to export an estimated 101.3 Tcf per year. Although PdVSA signed contracts with a number of investors for these projects, it is not clear that adequate feedstock will be developed to meet their scheduled start date of 2014
- According to OGJ, Venezuela had 1.28 million barrels per day (bbl/d) of crude oil refining capacity in 2011, all operated by PdVSA. The major facilities include the Paraguana Refining Center (940,000 bbl/d), Puerto de la Cruz (195,000 bbl/d), and El Palito (126,900 bbl/d). Through PdVSA and its subsidiary CITGO, Venezuela also controls significant refining capacity outside of the country
Refineries in Venezuela
- Paraguana Refinery Complex (PDVSA) 956,000 bdp
- El Palito Refinery (PDVSA) 130,000 bpd
- Puerto La Cruz Refinery (PDVSA) 200,000 bpd
- San Roque Refinery (PDVSA) 5,200 bpd
- Upgraders (Extra Heavy Oil Joint Ventures with PDVSA at Jose)
- Ministerio del Poder Popular para la Energía y Petróleo (Spanish)
- EIA Country Analysis
- Petróleos de Venezuela S.A. (PDVSA)
- Technip Venezuela References
- The Government nationalizes the fields in the Orinoco Oil Belt