Is Petrobras Eying Re-Entry into Venezuela’s Oil Market?

Petrobras, Brazil’s oil giant, is considering expanding its operations and is eyeing a potential re-entry into Venezuela’s oil market.

In a conversation with the Sputnik outlet, economist Rafael Quiroz revealed that CEO Jean Paul Prates is considering Chevron’s recent return to Venezuela as a model for expansion.

In November 2022, a deal with Venezuela’s government let Chevron resume operations.

These operations have been limited since 2019 due to U.S. sanctions. Rafael Quiroz sees a potential benefit for Petrobras.

He notes that PDVSA, Venezuela’s national oil company, owes Petrobras money. Meanwhile, Venezuela reports a 12% increase in oil production from January to August 2023.

The country aims to produce one million barrels per day by December. This goal comes amid a drive for more investments in the sector, which sanctions have weakened.

Quiroz offers caution, stating that Venezuela’s oil industry hasn’t fully recovered yet. He thinks Petrobras might also focus on other lucrative projects.

If Petrobras does return, new and commercially attractive projects will be their target, especially in natural gas.

Recently, Petrobras showed signs of interest in Venezuela as of May 2023. Prates plans visits to Venezuela, Bolivia, and Guyana for new gas projects.

Foreign Minister Yván Gil of Venezuela and Prates met to discuss deeper gas ties.

Lastly, Petrobras left Venezuela in 2019 when Brazil recognized opposition leader Juan Guaidó as President.

Background

Petrobras’s potential re-entry into Venezuela comes at a pivotal moment. Venezuela’s oil sector has struggled due to sanctions and underinvestment.

This move could signal a gradual normalization of economic ties between Brazil and Venezuela.

Historically, Petrobras had operations in Venezuela but left in 2019, amid diplomatic tensions.

The oil landscape is changing, and Venezuela wants to regain its position as a key oil producer.

Looking at Chevron’s example might offer Petrobras a pathway for re-entry. Chevron resumed its operations by navigating through U.S. sanctions.

This case could serve as a blueprint for Petrobras. The focus on natural gas is also timely, aligning with global energy transition goals.

Both countries could benefit from renewed cooperation in this vital sector.