Energy Secretary Wright Says Venezuela Could More Than Double Oil Production

Venezuela’s crude oil production rate could double in the next few years thanks to new deals set to be signed with U.S. and other foreign energy companies, U.S. Energy Secretary Chris Wright has said. 

“The investment in these deals will massively grow available oil production, which will give downward pressure on oil prices, but the biggest kink right now in gasoline and diesel prices is refining capacity,” Wright said during a one-day visit to Caracas, as quoted by OilPrice.

Venezuela’s peak oil production rate was about 3 million barrels daily, but that was in the late 1990s. Since then, amid U.S. sanctions and underinvestment, production has dropped to 1.25 million barrels daily this year. Exports are running slightly above 1 million barrels daily, with the biggest portion going to U.S. refiners along the Gulf Coast.

Last week, news broke that the U.S. federal government was negotiating a direct ownership stake in the country’s high-yield field that contains combined reserves of 90 billion barrels of crude. At the end of last week, President Trump called the deal “historic”, covering 17 fields with target production of 1.5 million barrels per day. The deal will involve a U.S.-based company owned by a Venezuelan tycoon, which has already been granted 14 oil deals by the Venezuelan government.

The U.S. government will have rights to a 35% stake in the company plus access to 20% of North American Blue Energy Partners’ production at cost. The U.S. federal government will also have the right of first refusal for the purchase of the other 80% of NABEP’s production from Venezuelan fields.

Analysts have noted that such a major boost in Venezuelan crude oil production would require substantial investments, with Rystad Energy putting the total at some $180 billion, which would need to be invested over the next ten years.