Venezuela Needs $183 Billion to Scale Crude Oil Output to 3 mbpd by 2040

Venezuela, despite holding 18% of the world's oil reserves, currently contributes only 0.8% to global crude output. This is due to years of underinvestment and infrastructure challenges.  

To address these issues, Venezuela requires an investment of $183 billion by 2040 to elevate its crude oil production to 3 million barrels per day (bpd), a level last seen in the late 1990s. 

Investment Requirements for Boosting Oil Production 

According to Rystad Energy, Venezuela needs to invest approximately $183 billion over the next 15 years to increase its oil output from the current 1.1 million bpd to 3 million bpd by 2040. 

This investment is crucial to overcome the existing infrastructure constraints and underinvestment that have plagued the country's oil sector. 

To maintain the current production level of 1.1 million bpd, an investment of $53 billion is required over the same period. Additionally, with limited incremental spending, only 3,00,000 bpd of additional supply can be restored within the next 2-3 years. 

Path to Achieving 3 Million BPD 

To surpass the 1.4 million bpd mark, a stable annual investment of $8-9 billion from 2026 to 2040 is necessary, in addition to the capital needed to maintain current production levels.  

This strategy could see Venezuelan oil production recover to 2 million bpd by 2032 and reach 3 million bpd by 2040. 

Read More: US–Venezuela Tensions and Crude Oil Prices: Why India Faces Limited Impact! 

International Involvement and Financial Needs 

While Venezuela's national oil company, PDVSA, can finance some of this investment organically, at least $30-35 billion of international capital is required within the next 2-3 years to make the 3 million bpd target by 2040 feasible. The largest buyers of Venezuelan oil currently are China and the US. 

Impact on Indian Companies 

Indian companies like Oil and Natural Gas Corporation (ONGC) and Reliance Industries (RIL) could benefit from the resurgence of Venezuelan oil production. ONGC Videsh Ltd (OVL) holds stakes in 2 Venezuelan oil fields, San Cristobal and Carabobo-1. 

OVL has invested significantly in these projects, with dividends from the San Cristobal project currently affected by sanctions. 

Conclusion 

Venezuela's plan to invest $183 billion by 2040 aims to significantly boost its oil production capacity. This investment is essential to address the long-standing issues of underinvestment and infrastructure constraints, enabling the country to leverage its vast oil reserves more effectively. 

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