The invasion of Ukraine and the meeting between President Biden’s officials and Nicolás Maduro in Caracas have stirred concerns among experts at PDVSA. Currently, all the “Venezuelan energy sector experts” speaking to the media are making untenable claims about their supposed ability to fill the gap that sanctions on Russian energy will create in the market. They talk about “surplus capacity… the ability to quickly ramp up production to 600,000 barrels per day… releasing millions of barrels held in strategic reserves… Venezuela taking Russia’s place in U.S. oil imports.” Given the mismanagement at PDVSA since Hugo Chávez took over in 2002, it’s hard to comprehend what these “experts” are referring to.
Venezuela is not in a position to potentially fill the void left by Russia. In fact, more sanctions on Putin’s regime will decrease Venezuela’s participation in its traditional markets (China, India, Malaysia), which is precisely where Russian oil will end up if the U.S. and Europe close the door (just ask Trafigura, Glencore, Vitol, and Lukoil). There are already discussions in India about implementing a mechanism to absorb the Russian surplus, and it’s unimaginable that China would refuse to increase energy trade with comrade Putin.
Whether the U.S. Treasury lifts all sanctions against Venezuela/PDVSA to allow for increased production (which is unlikely), ramping up production to the cited levels will take many years and, more importantly, billions of dollars in investment. In a country notorious for breaching contracts, nationalizations, and expropriations, this is unlikely to happen.
Venezuela does not have a strategic reserve. Venezuela does not have idle capacity. Its oil industry has been paralyzed by mismanagement and the largest embezzlement of funds this century. Over one trillion dollars in revenue has vanished into an endless pit of corruption constructed by Rafael Ramírez. This has continued under all his successors at the top of PDVSA.
The scenario painted is not even realistic. Therefore, it is more than ignorant to make such claims about Venezuela.