Communicator

Oil Reserves by Country in 2024 | Keyson Stats, Youtube

Venezuela was once renowned for having one of the world’s largest and most sophisticated refining systems, with the Complejo Refinador de Paraguaná (CRP) at its heart. For decades, refineries such as Amuay, Cardón, and El Palito enabled the country to meet robust domestic fuel demand and export a significant surplus to international markets. However, over the past two decades, chronic underinvestment, deferred maintenance, political interference, and the exodus of experienced personnel have eroded the operational reliability and capacity of these facilities. The situation has been further aggravated by tightening U.S. sanctions since 2019, which have restricted access to spare parts, technology, and international financing, compounding technical and logistical challenges already facing the sector.

Venezuela’s Extraordinay Hydrocarbon Wealth

This decline in refining performance stands in stark contrast to Venezuela’s extraordinary hydrocarbon wealth. The country holds the world’s largest proven crude oil reserves, estimated at over 300 billion barrels, primarily concentrated in the Orinoco Belt, as well as significant natural gas resources exceeding 200 trillion cubic feet. Oil has long been the backbone of Venezuela’s economy, accounting for about 90% of export revenues and supporting a trade surplus for much of the late 20th century. Despite this abundance, Venezuela’s oil production has dropped sharply in recent years, falling from more than three million barrels per day a decade ago to below one million barrels per day by the mid-2020s. The gap between resource potential and operational reality has widened as infrastructure deteriorates and access to capital and technology remains restricted, with projections suggesting continued volatility depending on market access and investment levels.

High Crude Oil Cost Structure

A key factor complicating Venezuela’s production outlook is the relatively high cost structure of its crude oil. The average production cost for Venezuelan crude is estimated at $18 per barrel, with some heavy grades like Boscan near $16 per barrel and synthetic crudes from the Orinoco Belt incurring additional costs due to the need for diluents and upgrading. These costs can become prohibitive when international oil prices fall, and profit margins are further squeezed when Venezuelan blends are sold at a discount compared to global benchmarks. For example, the Merey blend, a key export grade, has recently traded around $17–$18 per barrel, while diluted crude oil (DCO) from the Orinoco Belt can fetch even less, sometimes below breakeven when including diluent expenses. This cost dynamic means that, even with vast reserves, Venezuela’s ability to ramp up production and exports is highly sensitive to global oil prices and access to affordable financing and technology.

A Refining Sector Adrift

As of May 2025, Venezuela’s main refineries— as Amuay, Cardón, and El Palito—are producing a fraction of their potential output. At the CRP, which includes Amuay and Cardón, total crude processing was about 187,000 barrels per day, or just 20% of the complex’s 955,000 bpd nameplate capacity. Cardón recently restarted its 88,000 bpd fluid catalytic cracking unit (FCC) after more than a year offline. The FCC is now running at about 26,000 bpd, while only one of Cardón’s crude distillation units is operational, processing 50,000 bpd—far below the refinery’s design. Amuay, the country’s largest refinery, is processing 137,000 bpd of crude and its FCC is running at 38,000 bpd, both well under capacity. Feedstock for these refineries is supplied by Venezuela’s upgrading companies, Petropiar and Petromonagas, as well as crude from Zulia state. The El Palito refinery has also experienced repeated shutdowns and was recently brought back online after 11 months, with its FCC producing about 26,000 bpd of blendstock, but still far from full capacity.

Strategic Alliances with International Partners

To address these challenges, PDVSA has adopted a multi-faceted strategy. The company has focused on restarting critical units, such as the FCCs at Cardón and El Palito, often with technical and financial support from international partners. Iran has played a significant role, providing both expertise and equipment under a $460 million agreement aimed at overhauling the CRP and replacing U.S.-origin components with Iranian and Chinese alternatives. Chinese financing has also been instrumental, particularly in supporting the restart of Amuay’s FCC and the ongoing deep-conversion project at Puerto La Cruz. Domestically, PDVSA has implemented measures to conserve energy and prioritize feedstock allocation, sourcing crude from joint ventures and key producing regions to keep essential units running. The government has also sought new foreign investment, promoting opportunities in oil, gas, and refining at international forums, though the legal and political environment remains a deterrent for many potential partners. Meanwhile, opposition-led reform proposals have called for opening the sector to greater private participation, but these have not gained traction with the current administration.

Challenges and Opportunities on the Horizon

Looking ahead, Venezuela’s vast oil and gas reserves remain a strategic asset with the potential to reshape both the country’s economy and the global energy landscape—should the sector’s structural and political challenges be addressed. If sanctions were eased and substantial investment returned, Venezuela could rapidly increase production and refining throughput, leveraging its unmatched resource base to reclaim a major role in international oil markets. However, realizing this potential will require not only a supportive oil price environment, but also technical and financial rehabilitation, as well as significant reforms to governance, transparency, and the investment climate. In the absence of such changes, Venezuela’s refining sector is likely to remain underutilized, with the country’s enormous hydrocarbon wealth continuing to represent unrealized opportunity rather than actual market influence.

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Description of the Bajo Grande refinery has been updated.

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Description of PDVSA has been updated.

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