Venezuela Slightly Ups Oil Output, Expands Iran Cooperation

Caracas and Tehran held their ninth high-level economic summit to open new cooperation avenues as well as investment in Venezuelan oil projects.

Caracas, November 17, 2022 ( – Venezuela’s oil production rose marginally with new Iranian condensate imports as the two countries prepare to extend cooperation in several key economic sectors.

According to secondary sources from the latest Organization of Petroleum Exporting Countries (OPEC) report, October’s production stood at 679,000 barrels per day (bpd), an uptick from the 669,000 bpd pumped in September. For its part, Venezuelan state oil company PDVSA reported 717,000 bpd, an improvement from the previous month’s 666,000 bpd.

PDVSA is reportedly drawing production from new wells located south of Maracaibo Lake in western Zulia state, reaching some 98,180 bpd in October, although recent flooding in the area has hampered efforts. Venezuela has also continued ramping up Iranian condensate imports, which is used to dilute heavy Venezuelan crudes, adding to the slight increase in production.

The most recent shipments of Iranian condensate, as well as crude to Venezuela, included two cargoes of 2 and 1.95 million barrels in August and a 2.1 million dispatch in October, according to Vortexa. Another Iranian cargo is expected in mid-November, sources told Argus Media. In exchange, a 1.9 million barrel load of Venezuela’s Merey 16°API was shipped last month to Tehran as partial payment for the imports.

Since 2020, Venezuela and Iran have strengthened their partnership to overcome US sanctions with Tehran sending fuel, crude, diluents, equipment, materials, and even technicians to help restart oil extraction and refining operations. In September 2021, the countries began an oil-for-condensate swap deal followed by a 20-year cooperation map signed in June.

Recently, high-level delegations from both countries held the ninth meeting of the Iran-Venezuela Joint Economic Committee in Tehran in order to expand bilateral dealings, reported the Iranian agency IRNA. Between November 11-15, the two sides inked a new document focusing on energy, science, technology, healthcare, education, agriculture, and tourism, explained Venezuelan Agriculture and Land Minister Wilmar Castro Soteldo.

“[This is] a great document for presidents [Nicolás Maduro and Ebrahim Raisi] to make the corresponding decisions,” stated Castro. He added that more than 40 Iranian companies expressed readiness to invest in Venezuela, including in the Caribbean country’s electric system.

As part of the expanded partnership, Iranian car manufacturer Saipa will soon export 1,000 vehicles to Venezuela out of an 80,000 car order, reported Iranian media.

For his part, Venezuelan Transportation Minister Ramón Velázquez met with Iran National Development Fund (NDF) chairman Mehdi Ghazanfari and welcomed his proposal to invest in Venezuela’s oil and petrochemical projects. The NDF is Iran’s sovereign wealth fund created in 2011 to turn oil and gas revenues into durable wealth.

Venezuela’s modest oil production recovery, reaching one million barrels last December, is mainly attributed to the ongoing wide-reaching alliance with Iran. Nonetheless, crude output has stumbled this year as the industry remains hindered by US sanctions.

Since 2017, Venezuela’s oil sector has been under siege following the imposition of financial sanctions against PDVSA followed by a full-fledged oil embargo in 2019 as well as secondary sanctions and other threats throughout 2020. The measures were largely responsible for the country’s 1.9 million bpd crude output diving to less than 350,000 bpd in the second half of 2020.

Lower oil production has also resulted in lower exports throughout the years with some small hikes since 2021 after Caracas teamed up with Asian intermediaries to find alternate routes for oil shipments.

In October, Venezuela registered 533,968 bpd in exports of crude oil and byproducts, the fourth-lowest monthly average this year, as reported by PDVSA and Refinitiv Eikon vessel-tracking data. Most cargoes went to Malaysia and China.

However, the exports decline will soon be slightly overturned with new oil shipments about to set sail to Europe. Following a four-month hiatus, Italian oil company Eni and PDVSA agreed to resume an oil-for-debt swap deal that had seen Eni receive 3.6 million barrels of Venezuelan diluted crude oil (DCO) between June and July.

According to Reuters, an Eni unit has been assigned two cargoes of one million DCO barrels each for November loading. In May, Eni and Spain’s Repsol obtained sanctions exceptions from the US Treasury Department amidst Europe’s energy crunch.

While the swap deal pays off PDVSA’s billions of dollars in debt to the two firms, Caracas had suspended shipments demanding more substantial benefits, mainly fuel imports as the country’s refineries continue hampered by frequent operational disruptions. Neither Eni nor PDVSA have informed if the resumed deal includes expanded terms.

US oil corporation Chevron has likewise been lobbying for a sanctions waiver in order to pump and sell Venezuelan oil from its four-joint ventures in the country using an oil-for-debt swap deal. The US Treasury Department has not offered any updates on Chevron’s request.

Edited by Ricardo Vaz in Caracas.