Venezuela, home to the world’s largest oil reserves, is facing significant challenges that render its oil fields less attractive for investment. As of this week, shares of Chevron Corp. (CVX), the only American oil company operating there, spiked 6% amid renewed interest, but analysts highlight critical issues. Estimates indicate that at least $80 per barrel is required for new steam-assisted projects in Venezuela’s Orinoco Oil Belt to break even, while current oil prices hover around $60, with projections by the U.S. Energy Information Administration suggesting further declines.
The geographical challenges further complicate development, as Venezuela’s oil fields are located in the center of the country, necessitating extensive infrastructure for access. TotalEnergies SE sold its Venezuelan assets at a $1.38 billion loss in 2021, highlighting ongoing operational difficulties. In contrast, energy firms in places like Guyana benefit from easier offshore extraction methods, creating a stark disparity in investment opportunities.
Forecasting future production, analysts from Rystad Energy predict it may take 14 years and an investment of $183 billion to restore Venezuela’s oil output to its 2010 level of 3 million barrels per day. This prolonged timeline and hefty financial demands serve as crucial deterrents for potential investors, prompting a focus instead on more promising U.S. options like the Permian Basin, known for its low extraction costs and high profitability.
