The latest monthly report from the Organization of Petroleum Exporting Countries (OPEC) placed Venezuela’s May output at 735,000 barrels per day (bpd), according to secondary sources. The figure rose by 9,000 bpd compared to the previous month.
The numbers supplied directly by state oil company PDVSA followed a similar pattern, going from 810,000 bpd in April to 819,000 bpd in May.
Despite the production uptick, exports fell by 14 percent in May as a result of a fall in inventories of light crude required to blend the extra heavy crude from the Orinoco Oil Belt into exportable grades.
The present output is the highest registered since early 2020. However, it remains significantly below the 1.9 million bpd pumped in mid-2017 before the first US sanctions levied against the oil industry.
For the past six years, the US Treasury has imposed financial sanctions, an export embargo, secondary sanctions and a bevy of other measures designed to choke off Venezuela’s main source of revenue and trigger regime change.
The policy was in the spotlight following controversial comments by former US President Donald Trump. During a political rally in North Carolina on June 10, Trump said “Venezuela was ready to collapse” when he left office and that the US would have “taken all that oil.”
The Biden administration has left its predecessor’s “maximum pressure” architecture in place, with the exception of a limited license granted to oil giant Chevron.
The severe constraints posed by Washington’s blockade have seen Caracas turn to international allies to keep oil production afloat. The Nicolás Maduro government has struck wide-reaching cooperation agreements with Iran, including a long-term swap deal that sees Venezuela exchange heavy crude for condensate and other diluents.
The two allied nations signed a further 19 agreements this week, with special focus on the petrochemical sector, on the occasion of Iranian President Ebrahim Raisi’s visit to Caracas.
“The relationship between Iran and Venezuela is not just diplomatic, it is a strategic relationship between two countries with common interests, common visions and common enemies,” the Iranian leader said in a joint press conference with Maduro on Tuesday.
The two presidents likewise pledged to raise bilateral trade, currently at an estimated US $3 billion, to $20 billion a year. They additionally stated that establishing direct shipping routes is a priority in the near future.
Tehran has also provided materials and technicians in joint efforts to reactivate Venezuelan refineries. Due to ongoing repair work, the plants have operated in a stop-start fashion leading to fuel shortages, particularly outside the capital Caracas. PDVSA authorities recently announced the resumed operations at the catalytic cracking unit at El Palito refinery, Carabobo state.
Alongside the ongoing cooperation with its main Middle Eastern ally, the Maduro government is likewise looking to secure foreign investments in natural gas exploration.
On Wednesday, Oil Minister Pedro Tellechea and Foreign Minister Yván Gil held a meeting with diplomatic representatives from the European Union, Spain, France, Italy and Germany to “evaluate opportunities for energy cooperation.”
Venezuela currently counts on the world’s eighth-largest proven natural gas reserves. An ongoing certification process of off-shore deposits could see the country rise to fourth place. Maduro has stated that the South American nation is ready to meet Europe’s natural gas demands.
In May, Venezuela granted a license to Spain’s Repsol and Italy’s Eni to export natural gas liquids (NGL) from their jointly-owned Cardón IV offshore project. According to Bloomberg, PDVSA is likewise negotiating with Repsol and Maurel et Prom (France) to overhaul compression plants that capture gas that is flared.
Natural gas extraction offers potentially more favorable arrangements for foreign corporations than joint oil ventures since there is no requirement that PDVSA be the majority shareholder. Nevertheless, energy companies are likely to look for a green light from the US Treasury Department before proceeding in order to avoid secondary sanctions.
Venezuela is currently engaged in negotiations with Trinidad and Tobago as well over a possible joint deal to export natural gas from its offshore Dragon field, which has 4.2 trillion cubic feet (tcf) worth of deposits.
The talks have been conditioned by a US license that limits cash payments to Caracas. The Maduro government has denounced it as a “colonial” imposition, while the Trinidadian authorities are reportedly lobbying for changes to the license ahead of renewed discussions between the two neighbors.