Venezuela could be able to raise its crude oil production by 25% from current levels if the temporary U.S. easing of the oil sanctions becomes permanent, according to a consensus forecast of analysts polled by Bloomberg.
Venezuela’s oil production currently stands at around 800,000 barrels per day (bpd), according to various estimates. The eased sanctions would allow the South American country holding the world’s largest crude oil reserves to boost production by 200,000 bpd, analysts say, although the timing of achieving this increase remains uncertain.
On Wednesday, the United States lifted sanctions on Venezuela’s oil industry after the Nicolas Maduro government reached a deal with the opposition that could see elections held next year.
The U.S. issued a six-month general license temporarily authorizing transactions involving the oil and gas sector in Venezuela. The license will be renewed only if Venezuela meets its commitments under the so-called electoral roadmap, the U.S. Treasury noted.
The license, valid until April 18, 2024, authorizes the production, lifting, sale, and exportation of oil or gas from Venezuela, and the provision of related goods and services, as well as payment of invoices for goods or services related to oil or gas sector operations in Venezuela.
Authorization is also granted to new investment in oil or gas in Venezuela and to the delivery of oil and gas from Venezuela to creditors of the Government of Venezuela, including creditors of PdVSA entities, for the purpose of debt repayment.
The easing of the sanctions could raise U.S. imports of heavy crude from Venezuela as it now allows purchases of crude. Until Wednesday, Chevron was the only Western supermajor with special authorization to operate oil fields and export crude from Venezuela, under a special license issued by the Biden Administration late last year.
An increase in Venezuelan production and exports could also help ease the tight global oil supply.
By Tsvetana Paraskova for Oilprice.com