Post-Maduro Era: Future of Oil, Gas, and Mining

The capture of Nicolás Maduro by U.S. forces marks a pivotal moment for Venezuela, particularly concerning its oil, gas, and mining sectors. This event opens the door to either a swift recovery or prolonged uncertainty, depending on the political leadership that follows. Venezuela, endowed with the world’s largest oil reserves, has seen production decline significantly over the past decade. Current oil output is approximately 1 million barrels per day (b/d), down nearly 2 million b/d from prior levels.

Venezuela’s Resource Potential

In addition to oil, Venezuela holds the largest natural gas reserves in Latin America. However, the country is wasting significant amounts by venting gas instead of utilizing it. Environmental concerns arise as mining practices are often illegal and harmful, leading to social and ecological damage.

• Oil Production: 1 million b/d, previously at 3.5 million b/d in the 1990s.
• Natural Gas Reserves: Approximately 200 trillion cubic feet (TCF).
• Current Annual Natural Gas Revenue Loss: Roughly $1 billion.

Political Leadership and Resource Management

The future governance of Venezuela’s natural resources remains uncertain. President Donald Trump has hinted that Vice President Delcy Rodríguez may lead initially. Meanwhile, opposition leader María Corina Machado, who heads a coalition that won the 2024 elections, suggests readiness to improve resource management.

Optimistic Scenarios for Recovery

For Venezuela to capitalize on its oil, gas, and mining prospects, significant investment and reforms are essential. A trustworthy government could elevate oil production back to pre-sanction levels of 1.5 to 2 million b/d within two years.

• Potential for oil production growth.
• Need for an overhaul of the institutional and legal framework.
• Attracting investments will require improved safety and environmental standards.

Natural Gas Opportunities

Venezuela’s natural gas production is currently plagued by inefficiencies, with 40% vented or flared. This oversight represents an opportunity cost of $1 billion annually in missed revenues. With a more conducive legal environment, the country could export gas to neighboring Colombia and Trinidad, potentially reaping an additional $1 to $1.5 billion in revenue.

Critical Minerals and Mining Sector

Along with oil and gas, Venezuela’s mining sector has vast potential. Historically, mining exports made up about 6% of total exports during the 1990s. However, this has diminished due to government policies that resulted in the expropriation of private operators.

• Key minerals: nickel and coltan.
• Mining Arc: Designates 12% of Venezuela’s territory for mining, leading to environmental degradation.

The development of oil, gas, and mining resources is crucial for Venezuela’s economic recovery and social well-being. Still, the path forward hinges on effective governance that addresses both investment and sustainability issues.