Latest update March 29th, 2025 5:38 AM
Guyana to surpass Venezuela’s current oil output by 2022
Guyana is set to produce by 2022 more than the current output of Venezuela, which was once a giant in the oil industry.
UK-based global business information provider IHS Markit said recently that Venezuela’s crude oil production is currently around 100,000 to 200,000 barrels a day, and that it could eventually fall even lower.
Meanwhile, ExxonMobil’s second project in the Guyanese Stabroek Block, Liza Phase Two is set to startup in 2022, taking Guyana’s daily production as high as 340,000 barrels a day. Yet, that is only the beginning for Guyana, as ExxonMobil and other oil companies operating offshore here are eager to discover and produce, while investors continue to be disincentivised the situation in Venezuela.
Venezuela has the largest oil reserves on the planet, with over 300 billion proven barrels of crude oil to pump, according to the Organization of Petroleum Exporting Countries (OPEC).
IHS said that Venezuela’s output was at 650,000 barrels a day last year, and was as high as two million in 2017.
Yet, Vice President and Head of oil markets at IHS Markit, Jim Burkhard said, “Never before has a former major oil producing country seen output fall so low for so long. In Venezuela’s case, if there is any surprise, it is that the disintegration did not happen faster.”
The firm said that the Bolivarian Republic, despite being a founding member of OPEC, is now the third smallest producer in OPEC, behind Equatorial Guinea, with reserves 300 times less, and Libya which is torn by war and strife.
Venezuela is about to be overtaken by Guyana, a country that began to produce oil for the first time less than a year ago.
How did such a global powerhouse fall so far? IHS attributes the situation to US sanctions, limited domestic storage and exacerbation by the obliterating effect of the COVID-19 pandemic on oil prices.
Additionally, the posturing of the country’s ruling military elite, IHS indicated, is making little progress.
Venezuela’s oil ministry as well as Petróleos de Venezuela, S.A., the State oil company, are reported to have employed erratic schemes to incentivise foreign companies, such as tax exemptions. This includes a production licence signed in 2017 with Russia’s Rosneft for some gas fields, for which the Russian company boasts favourable tax terms.
The country also threatened to compel foreign companies to stay in joint ventures with the State oil company, PDVSA, according to IHS.
The firm said that Venezuela is likely to continue trying to offer expanded fiscal and contractual incentives to companies in exchange for sustained participation in the country’s failing oil industry. It also raised the possibility that Venezuela could look to seize foreign investors’ assets in its aggressive bid to keep the industry running.
IHS said that the shifts in world oil demand and supply caused by the pandemic will mean that Venezuela’s milestone downfall in the industry will have little to no impact on the stability of world markets.
“There is ample production capacity around the world to satisfy the recovery in world oil demand that has been underway since May,” IHS’s Burkhard said.
While the firm is of the view that the country’s large reserves make bouncing back possible, IHS said that the poor state of Venezuela’s infrastructure, US sanctions and lower global demand make it unlikely for the foreseeable future.
Meanwhile, Guyana is on track to be a powerhouse in the global industry, with a likelihood of producing more than a million barrels of oil by 2026.
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