Venezuela’s Oil Sector: Despite Sanctions Easing, Political Instability and Failed Promises Continue to Ravage the Sector

Venezuela’s oil sector continues to face challenges due to political instability, despite the easing of US sanctions six months ago. The country’s President, Nicolás Maduro, has been accused of ongoing crackdowns on opposition and failing to hold free presidential elections as promised. Major companies like Chevron, Shell, and Repsol had entered into agreements with Maduro’s government and state oil company PDVSA following the easing of sanctions.

However, an agreement reached between Maduro and the US-backed opposition in Barbados turned out to be an empty promise, as main opposition leader María Corina Machado was not allowed to run and her replacement was also refused candidacy. The US government has now decided to reimpose some sanctions on Venezuela’s oil sector, citing these developments.

Despite having the world’s largest oil reserves and significant natural gas reserves, decades of mismanagement, lack of maintenance, and US sanctions have led to a significant drop in oil production in Venezuela. The country was once producing 2.9 million barrels of oil per day but by 2020 production had dropped to just 400,000 barrels per day. With the easing of US sanctions in the first quarter of this year, production increased to 800,000 barrels per day. These developments highlight the complex relationship between Venezuela’s oil sector, international partnerships, and the impact of political decisions on production levels.