Venezuela’s Oil Reserves: Why Trump’s Boost Faces Hurdles | Folha de S.Paulo

Venezuela’s vast oil reserves may not be enough to spur the production increase sought by the administration of Donald Trump, according to industry experts. A confluence of economic conditions, currently absent and unlikely to materialize in the near future, presents significant obstacles to a substantial boost in output.

Much of Venezuela’s crude oil is only economically viable when prices exceed $80 per barrel. Even if prices reach that level, legal uncertainties – stemming from the government’s previous seizures of private sector assets – will likely deter foreign investment, analysts say. The situation highlights the challenges facing efforts to increase global oil supply amid geopolitical instability.

“The energy transition will demand hydrocarbons under more favorable conditions, and Venezuelan oil – that heavy crude that makes up the bulk of the country’s reserves – is difficult to work with,” explained geophysicist João Figueira.

Figueira headed operations for Petrobras in Venezuela from 2009 to 2012, during the government of Hugo Chávez. The Brazilian state-owned oil company entered the country in 2002 with the purchase of Perez Companc, which held contracts with Venezuela’s PDVSA. Petrobras exited in 2013, selling Perez Companc.

It was Chávez who estimated Venezuela’s reserves at 303 billion barrels of oil, elevating the nation to the position of having “the largest oil reserves in the world” – a claim frequently repeated following U.S. efforts to pressure the government of Nicolás Maduro.

However, experts are questioning the accuracy of that assessment. “The late Roberto Campos [former Minister of Planning and president of BNDES] used to say that mineral resources are geological corpses that require a market, technology, and investment. And investment only happens if there’s an economic signal,” Figueira said.

Consultancy Rystad Energy estimates that Venezuela would need $183 billion in investment to return production to three million barrels per day, tripling current levels. This investment would be necessary to rehabilitate the country’s dilapidated infrastructure, which has suffered years of underfunding.

Even simply restoring existing fields, the consultancy says, could increase production by up to 350,000 barrels per day within three years. These fields would be viable with oil prices around $40 per barrel. However, Rystad Energy believes it will be difficult for Venezuela to attract the necessary investment to surpass two million barrels per day.

“To return to the historic high of three million barrels per day, the price of oil would have to remain above $80, or possibly even reach three digits [per barrel],” Rystad’s deputy head of analysis, Artem Abramov, told reporters.

This is because the majority of Venezuela’s reserves consist of extra-heavy oil, requiring specialized technologies for production and transportation. Geologist Jorge Camargo, who previously led Petrobras’ international subsidiary, compared it to “pitch.”

“You have to inject hot steam [into the wells] to soften it, use pumps to bring it [to the surface], then soften it again to circulate in a pipeline,” Camargo explained. “All of this to sell it at a huge discount [compared to Brent oil].”

Here are examples of different types of oil, according to the Platts Periodic Table of Oil, from S&P Global:

Oil quality is measured by the mix of derivatives it can produce, from lighter, higher-value products (like gasoline and diesel) to heavier, cheaper ones (like fuel oil and asphalt).

The market uses a measure called API gravity: the higher the number, the lighter the oil. Merey oil, accounting for nearly half of Venezuela’s production, has an API gravity of 16. Tupi oil, from Brazil’s pre-salt layer, has a gravity of 31 and is considered medium.

Venezuelan extra-heavy oil also has a high sulfur content, another factor that reduces its market value. Merey has a sulfur content of 3.4%. Tupi, which has lower extraction costs, is sought after for its low sulfur content of 0.31%.

Former Petrobras president Jean Paul Prates emphasized that the concept of oil reserves is highly sensitive to international prices and a country’s regulatory stability – two factors currently unfavorable for Venezuela.

“With a barrel at $60, a significant portion of that volume doesn’t add up, especially considering the high production and upgrading costs, the structural dependence on imported diluent, the degraded infrastructure, and the political and legal risks,” he stated.

More conservative estimates, considering the current scenario, suggest that Venezuela’s recoverable reserves are between 20 billion and 40 billion barrels. Far smaller than the 303 billion estimated by Chávez, but still larger than Brazil’s proven reserves, of 17 billion barrels in 2024.

The reluctance shown by American oil companies, particularly Exxon, to initial appeals from Trump for investment in the country demonstrates that conditions are far from attractive.

“It’s a monumental challenge,” said former Petrobras executive Figueira. “Not to mention the environmental issues: the amount of emissions [of greenhouse gases] to produce this [Venezuelan extra-heavy oil] is enormous.”