Wood Mackenzie Foresees Slow Production Recovery in Venezuela

(Energy Analytics Institute, 21.Apr.2022) — Venezuela’s oil production is expected to gradually rise to as much as 1. 3 million barrels per day by 2028, according details revealed by Wood Mackenzie analyst Marcelo De Assis and Elen Simonyan in a recent report.

Highlights from the report published on 21 April 2022 follow:

— Venezuela is being looked to as a potential source to replace Russian barrels. Three senior US officials met with President Nicolás Maduro in March. Any easing of US sanctions is uncertain and politically contentious: Wood Mackenzie

— We expect production to continue a gradual recovery path, returning to 1.3 MMb/d by 2028. Capital reinvestment to sustain production has been absent. Annual capital investment will need to grow to $5bn: Wood Mackenzie

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— Positives supporting our recovery outlook include enviable recoverable reserve size, known geology and subsurface risks and international investors still having appetite for Venezuela. Negatives include US sanctions remaining effective until end of the decade, social and economic issues in the country and the higher emitting nature of heavier oil: Wood Mackenzie

PDVSA is the key player. The NOC will be able to afford our estimated capital programme by reinvesting its upstream cash flow at a reinvestment rate of 61% if prices remain around US$100/bbl but will struggle to self fund if prices go back to US$60/bbl: Wood Mackenzie

— The outlook is volatile and uncertain. We focus on base case outlook in this insight, but we also highlight three alternate scenarios that are mostly influenced by above ground factors: Wood Mackenzie

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By Ian Silverman. © Energy Analytics Institute (EAI). All Rights Reserved.