In an effort to enhance oil production, Venezuela has turned to previously dormant oil wells, resulting in a 10% increase in output.
Over the first half of 2023, the state-owned Petróleos de Venezuela (PDVSA) witnessed an over 10% surge, translating to an added 81,000 barrels daily compared to January’s figures.
Experts highlighted that many of these wells, despite their potential, had been inactive for decades due to them not being recognized as proven reserves.
Their non-operation was also influenced by past low oil prices.
However, a recent push by the Venezuelan government and successful evaluations showed these wells could contribute significantly to daily output.
Another significant point of discussion is the oil belt named after former President Hugo Chávez, which covers 70,000 square kilometers and is one of the world’s most substantial crude reserves.
Yet, the challenges of high production costs and the need for advanced technology hinder its full exploitation.
The heavy crude from this area requires extensive processing before being fit for global refineries.
On the economic front, Venezuela’s initiative aligns with the growing global oil demand, which is expected to peak at 102.2 million barrels daily in 2023.
Experts project that the oil price might even touch US$90 per barrel by year-end, considering rising demand.
However, the long-term economic impact of this production spike on Venezuela remains uncertain.
On the geopolitical side, recent leniency in sanctions has permitted both North American and European firms to venture into Venezuelan oil.
For instance, a 2022 deal between Caracas and US-based Chevron was established to amplify Venezuelan oil output.
Although sanctions didn’t trigger the country’s oil industry crisis, they’ve complicated Venezuela’s oil scenario, making exportation and revenue collection more intricate.