How Much Oil Does Venezuela Have? The Resource is Huge, but It is Heavy Oil with Very Low Recovery Rates and a Long History of Mismanagement

A Brief History of Venezuela’s Oil and Economic Development

     Oil was likely utilized from the numerous oil seeps in Venezuela from very ancient times. Oil production began in the early 1900s. According to an article by the FEP Finance Club:

“By 1928, it had become the world’s leading oil exporter and the second-largest producer, establishing itself as a major player in the global energy market.”

     Oil wealth was the main factor in transforming Venezuela from an agrarian economy to an industrial economy. Between the early 1930s and the mid-1950s, GDP per capita tripled. Foreign investment led to the development of significant production and refining infrastructure. Venezuela joined OPEC as a founding member in 1960. The oil embargo of 1973 led to windfall profits for the country, but unfortunately, there was also a rise in corruption. It is estimated that embezzlement reached a level of $100 billion between 1972 and 1997. In 1976, the oil sector was nationalized, and PDVSA was born as the national oil company. The country still prospered. In the late 1990s and early 2000s, Venezuela supplied roughly 1.5 to 2 million barrels per day to the U.S. as one of its main suppliers. Now, in 2025, the country as a whole exports less than half of that amount in total exports.

     The downturn in the oil industry in the early mid-1980s led to many problems in the country, including high inflation, and austerity measures were implemented. Clearly, it was an oil-based economy in need of economic diversification. Luca Santucci and Pedro Santos, in the FEP Finance Club article, note:

“In the following years, Venezuela faced turmoil with rampant corruption, protests, and strikes. Once regarded as South America’s wealthiest nation, Venezuela saw its economic status decline while neighbouring countries like Argentina, Uruguay, Chile, and Brazil surged ahead. Opposition movements grew, culminating in Hugo Chávez’s election in 1998.”

     Chávez was hugely popular and sought to root out corruption, but also made some very bad moves. He imitated Cuba in seeking state control, curbing freedom of the press, and allying with anti-Western nations. Oil production began declining. During the 2002-2003 oil industry strike, he dismissed very experienced PDVSA workers and replaced them with political appointees. Chávez was popular for his social programs but neglected investing in the capital-intensive oil industry. I worked with an American fellow in the Pennsylvania shale gas boom in the late 2000s who had lived and owned a farm in Venezuela, and he was trying to sell it for dirt cheap. Oil production continued to decline, and maintenance was not sufficient. It is fair to say, as is often said, that the country mismanaged its oil industry. By 2006, when Chavez was elected for a third term, he was still popular for his social programs but began to accelerate anti-American rhetoric, made several moves toward authoritarianism, and began nationalizing some foreign assets. Sanctions from Washington helped to forge alliances with anti-Western countries, including China, Iran, Russia, and Cuba. These alliances would later become the basis of a sanctions-evading network. Meanwhile, poverty and crime increased in the country.  

     Nicolas Madura assumed office in 2013 when Chávez died. Maduro continued and expanded Chavez’s nationalization policies and continued to not invest in the oil industry. Inflation soared to the highest levels in any country. There were shortages of basic products. Oil production continued to decline. Maduro’s 2018 election win was controversial, but his 2024 election, especially, is widely regarded as a sham election with faked results, which basically makes it a coup to hold on to power. Further sanctions also help to cripple both its oil industry and economy. Santucci and Santos write:

“In conclusion, Venezuela’s Oil saga, from its boom to its present day challenges, shows the double-edged sword that comes from the discovery of plenty of natural resources. The country’s journey from economic prosperity to economic turmoil illustrates the critical importance of prudent resource management and the importance of having a government with non-egotistical goals. With that said, the story of Venezuela, serves as a reminder of the complexities of profiting from the exploration of natural resources for national and social development and should also be studied to learn valuable lessons for developing forward-thinking strategies for other resource-rich countries navigating a similar path.”  

     Venezuela had developed due to oil and remained heavily dependent on oil, with up to 80% of its export earnings from oil in the 1950s and up to 90% more recently. It became one of the most economically successful countries in South America. When Chavez was early in his power and the economy was still good, Bernie Sanders visited and pointed to it as an example of the success of socialism. But the dominoes were already falling.  Its incompetent government failed to maintain the sector, which needed foreign investment and foreign technical expertise. It is a case study in how to ruin a country as well as a case study in the failure of socialism, in this case, mainly due to incompetence. Maduro presided over the country’s biggest drop in production, by almost 80% from 2015 to 2020, although Chavez’s previous policies set the stage.

     Earlier this year, Venezuela briefly began to produce over 1 million barrels per day, but that is now down to about 800,000 BPD. Chevron was allowed to resume production in the country, which led to about 200,000 extra BPD being produced earlier this year, as the graphs below show.

 

Venezuela’s Oil Resource

     Venezuela is endowed with the world’s highest amount of recoverable oil reserves at 303 billion barrels. An additional 500 billion barrels could one day be extracted from the Orinoco Oil Sands Belt, an accumulation that has an estimated oil in place at an astonishing 1200 billion barrels. Of course, those reserves would be much more expensive to develop. Unfortunately, that oil is an extra-heavy crude that would need treatment similar to the oil sands plays in Western Canada. Due to its high density and high sulfur content, it is less valuable on the market. Currently, about 50% of Venezuela’s oil exports come from the Maracaibo Basin, which contains roughly 15% of Venezuela’s proven oil reserves and is shallower to drill. The main source rock in the Maracaibo Basin is the Cretaceous La Luna Formation, which has been called a bituminous limestone that is very rich in organic matter. Similar Cretaceous-aged source rocks are found in other Venezuelan Basins.

     The most concise and comprehensive explanation I have ever heard about Venezuela’s oil reserves and the capability of producing them is reproduced below. It was written by Francisco J. Monaldi, director of the Latin America Energy Program at the Center for Energy Studies at Rice University’s Baker Institute for Public Policy. It is reproduced from a LinkedIn post.

     Some basic geology of Venezuela is shown below from K. H. James’s 2000 article in the Journal of Petroleum Geology.

     Some oil production data from the Energy Information Administration is shown below. This includes a graph of the economic freedom index of the world compared to that of Venezuela, from the Heritage Foundation.

     Venezuela produces a heavy oil that requires advanced technologies for its production. This adds to development expenses. The current state of the economy and the strong alienization of foreign investment suggest that production won’t rise much anytime soon.

     As summarized in an article in Mexico Historico:

“Venezuela, rich in heavy crude oil, requires advanced technologies to improve efficiency and reduce costs. Traditional extraction methods often prove inefficient in the context of Venezuelan oil, which has a high viscosity and sulfur content. Innovations in extraction technology, such as enhanced oil recovery (EOR), can significantly impact production rates.”

“For example, the use of steam injection and gas injection techniques can help mobilize oil that is otherwise difficult to extract. Steam-assisted gravity drainage (SAGD) allows for the extraction of heavy crude oil by injecting steam into the reservoir, reducing its viscosity and making it easier to pump to the surface. Implementing such technologies could be pivotal for Venezuela in revitalizing its oil production, especially given the country’s declining output in recent years.” 

     The potential remains for Venezuela to become an oil production powerhouse, but it will not happen if the current illegitimate government remains in power.

 

 

References:

 

Venezuela: A Deep Dive into its Oil History. Mexico Historico. Venezuela: A Deep Dive into its Oil History

Article – Venezuela’s Oil Saga: From Boom to Bust. Luca Santucci and Pedro Santos. FEP Finance Club. May 15. 2024. Article - Venezuela’s Oil Saga: From Boom to Bust - FEP Finance Club

Venezuela has the world’s most oil: Why doesn’t it earn more from exports?  Mohammed Haddad. Aljazeera. September 5, 2025. Venezuela has the world’s most oil: Why doesn’t it earn more from exports? | Energy News | Al Jazeera

Venezuela's oil exports fall over lower inventories, imports. Marianna Parraga. Reuters. November 3, 2025. Venezuela's oil exports fall over lower inventories, imports | Reuters

Country Analysis Brief: Venezuela. Last Updated: February 8, 2024. Next Update: February 2026. Energy Information Administration. Country Analysis Brief: Venezuela

Why Does Venezuela Have So Much Oil? John Staughton. Science ABC. Last Updated On: 19 Oct 2023. Published On: 23 Dec 2019. Venezuela Oil: Why Does Venezuela Have So Much Oil?

THE VENEZUELAN HYDROCARBON HABITAT, PART 1: TECTONICS, STRUCTURE, PALAEOGEOGRAPHY AND SOURCE ROCKS. K. H. James. Journal of Petroleum Geology, vo1.23(1), January 2000, pp 5-53. THE VENEZUELAN HYDROCARBON HABITAT, PART 1: TECTONICS, STRUCTURE, PALAEOGEOGRAPHY AND SOURCE ROCKS