Chavista Venezuela, an unviable substitute for Russian oil in the US

With an industry recovering from years of neglect, corruption and sanctions, the possibility that Venezuela can meet the US demand for Russian oil is unfeasible, at least in the immediate future, experts agree.

Washington announced this week an embargo on Russian oil and gas imports, as part of a battery of sanctions against Moscow after his invasion of Ukrainea measure that further triggered crude oil prices on the international market.

United States imported, according to data from its energy agency, just under 700,000 barrels a day of Russia, and now looking to get another provider. Venezuela? The White House does not recognize Nicolás Maduro as president and in 2019 imposed a battery of sanctions to force him out of power, which includes an oil embargo that is still in force.

However, in the midst of a new economic offensive against Russia over the war, a delegation of high-ranking government officials from Joe Biden visited Caracas last weekend for a surprise meeting with Maduro, a close ally of Vladimir Putin, in which the energy issue was addressed.

The oil expert Rafael Quiroz considers that Venezuela, the country with the largest oil reserves in the world “It is not an option” for the United States.

“For Venezuela to be an option, it must have the capacity to increase production”he explained, highlighting that what is currently produced in the Caribbean country is already “committed” to satisfy domestic demand and meet commitments with China, India and other countries.

“Flexibility” of sanctions

The current production of the former oil power stood at 755,000 barrels per day in January, according to the latest report from the Organization of the Petroleum Exporting Countries (OPEC).

It plummeted to 400,000, its worst levels since the 1940s, according to Maduro due to the sanctions, although experts agree that the fall was due to years of mismanagement and multimillion-dollar corruption within the state giant. Petroleum of Venezuela (PDVSA) in more than two decades of Chavista governments.

“This year we are going to two million barrels a day rain, shine or shine”Maduro promised this Wednesday.

But Carlos Mendoza Potellá, an oil economist, estimated that to reach that goal some “four or five years”given the level of deterioration in the industry.

The AFP in fact found abandoned facilities in Lake Maracaibo (Zulia, west), where oil exploitation began in the country, and spills in the east of the country, the other major production pole.

The experts agreed that in order to recover its industry, Venezuela will need a multi-million dollar foreign investment; change the hydrocarbon law; grant legal certainty to private companies that have been victims of expropriations in the past; remove controls, and lift US sanctions.

Luis Vicente León, an economist and political analyst, believes that there is room for now for a “flexibility” and not a full lift.

“We are going to see focal negotiations to license oil production within the framework of sanctions”he explained.

“Most aggressive competitor”

For León, the United States would consider that Venezuela supplies the demand in the Gulf of Mexico, an area that previously supplied until it was replaced by Russia as a supplier after the sanctions on Caracas. For that, Venezuela should abandon its sales to China and those it makes at deep discounts on the black market with the support of Moscow.

Venezuela “it can compensate, in the medium term, a piece of the Russian absence in the market”said the economist, who estimated that the scenario of doing business between the United States and Venezuela, questioned by political actors in Washington, may be tempting for Maduro.

“Putin may be a close friend of Maduro, but today he is going to be the most aggressive competitor”Leon pointed out. “When Russia is sanctioned, its oil, which is a lot and very good, will now go to the same market where Maduro sends his 500 of the 750,000 barrels a day”.

Maduro has expressed his “strong support” to Putin and has branded “crime” and “madness” Western sanctions against Moscow, which has shown no signs of degrading the relationship with Caracas. An example: Venezuelan Vice President Delcy Rodríguez met this Thursday in Turkey with Russian Foreign Minister Sergei Lavrov.