Venezuela has the resource base to rebuild oil production to about 3.3 million b/d over the next 10-12 years, but achieving that level will require major improvements in infrastructure, electricity supply, oilfield services, and the legal and fiscal framework for investment, the Oxford Institute for Energy Studies (OIES) said.

In an August report, Venezuela’s Oil and Gas Industry: The Challenge of Sustainable Recovery, OIES said the central challenge is no longer whether Venezuela has sufficient petroleum resources, but whether it can rebuild the technical, institutional, and infrastructure conditions needed to convert those resources into sustained production.

Venezuela has 303 billion bbl of proved crude oil reserves as of 2025, including 260.8 billion bbl of extra-heavy crude concentrated largely in the Orinoco Belt. The country also has an estimated 193.4 tcf of proved natural gas reserves, with about 87.8% associated with crude oil production.

The scale of those resources contrasts sharply with current production. Venezuela produced less than 1 million b/d of crude in 2025, compared with roughly 3 million b/d around 25 years ago. Production began to recover in 2026, with average quarterly output increasing to 1.06 million b/d in second-quarter 2026 from about 943,000 b/d in fourth-quarter 2025.

OIES said returning production to about 3.3 million b/d—the level Venezuela reached in 1998—is technically viable over a 10-12-year period. The figure, however, represents long-term production potential rather than a forecast. Achieving it would require sustained political transition, predictable fiscal terms, private capital and technology, infrastructure rehabilitation, reliable electricity and diluent supplies, and stronger institutions.

Phased Orinoco development

The report recommends a phased approach to developing the Orinoco resource base rather than treating the belt as a single homogeneous resource.

Based on an unpublished 2023 study by Gomez and Garcia, OIES divides the resource base into about 71 billion bbl of lower-viscosity crude suitable for cold production, 147 billion bbl requiring a combination of cold and thermal methods, and 44 billion bbl of higher-viscosity resources requiring more intensive thermal enhanced oil recovery and upgrading.

OIES recommends initially focusing on lower-viscosity Orinoco resources, brownfield opportunities, and rehabilitation of mature conventional fields. These projects could provide relatively rapid production and cash flow before operators move into more capital- and power-intensive thermal recovery projects.

Such sequencing also would allow oilfield infrastructure and services to develop alongside upstream investment, gradually building the technical and financial base needed for more complex projects.

Power remains a major constraint

Electricity is one of the biggest potential bottlenecks to Venezuela's recovery. OIES said deterioration of the national power system could delay rapid increases in oil production as well as broader economic expansion.

The problem becomes more significant as production shifts toward thermal recovery. Steam generation requires substantial amounts of fuel, with about 60-70% of steam-generation operating costs associated with fuel. Using associated gas to supply boilers and field-level power generation could help reduce dependence on the unreliable national grid.

The report therefore sees electricity rehabilitation and oil-sector investment as closely linked. Initial cold-production projects may be able to operate with grid reinforcement and local generation, while large-scale thermal recovery will require substantially greater power capacity.

Investment framework faces risks

OIES also identified the investment framework as a critical issue for long-term projects.

January 2026 Hydrocarbons Law Reform gives private partners greater operating and commercial flexibility, including the ability to market oil directly, manage bank accounts abroad, and control technical operations. It also includes mechanisms intended to preserve economic equilibrium and allow certain fiscal reductions.

However, Articles 35(4) and 43 provide for assets built or acquired under contracts to revert to the state without compensation when contracts expire. OIES warns that this could recreate the “horizon problem” associated with Venezuela's 1971 Reversion Law.

Because companies may have little economic incentive to invest in assets near the end of a contract, the provisions could encourage underinvestment during the final 5-10 years of long-term projects. The risk is particularly important for Orinoco thermal projects, which require large upfront investments and development periods extending over decades.

PDVSA role needs to change

OIES also recommends a major restructuring of Petróleos de Venezuela SA (PDVSA). Years of accumulated debt, contingent liabilities, and operating losses have limited the company's ability to finance new investment cycles.

Rather than continuing to function simultaneously as regulator, operator, investor, and social-development agency, PDVSA should become a leaner and financially sound strategic asset manager, the report said.

Its responsibilities would focus on strategic asset management, contract supervision, geological evaluation, environmental oversight, and coordination of national infrastructure. Day-to-day operations, drilling, production optimization, logistics, and specialized technical services could increasingly be handled by private operators under transparent contracts and regulatory oversight.

OIES said the technical and institutional changes must be advanced together. Lower-cost cold production can generate the cash flow and operational capacity needed to support progressively more sophisticated thermal projects, while legal and corporate reforms can reduce investment risk as larger amounts of private capital become necessary.

US-Venezuela deal

OGJ believes that the recent US-Venezuela energy agreements could provide an important catalyst for the recovery outlined by OIES.

Chevron has committed more than $7 billion over 5 years to expand its Venezuelan operations, while Eni and other international companies have also agreed to increase investment. GE Vernova’s agreement to support Venezuela’s power system could help address one of the sector’s most critical bottlenecks. The deals therefore align closely with OIES’s emphasis on private capital, technology and infrastructure investment, although their longer-term impact will depend on whether Venezuela can maintain credible legal protections, reliable operating conditions and a stable fiscal framework.