US-Venezuela oil deal: Opportunity, but long road to recovery

A new US-Venezuela oil agreement covers 17 strategic developments containing around 65 billion barrels of recoverable crude, spanning greenfield opportunities in the Orinoco Belt and brownfield redevelopments around Lake Maracaibo.Rystad Energy analysis indicates the deal could materially reshape Venezuela’s long-term production trajectory, but the recovery is likely to be gradual, initially brownfield-led, and subject to significant political, contractual and execution risk.

Rystad’s Radhika Bansal, senior vice president, Latin America oil and gas:

“The challenge facing Venezuela has always been whether the right conditions would emerge to develop the country’s resources.
This agreement improves those conditions, with more competitive fiscal terms and a clearer pathway for international capital.
However, investors looking at multi-decade projects need confidence that a contract signed today will be honored by whoever governs Venezuela in ten or twenty years.
The political reaction inside the country, with criticism coming from both Chavista and opposition circles, is a signal that durability is not guaranteed.
Our base case is a gradual, brownfield-led recovery in the near term, with Orinoco greenfield production only becoming meaningful from around 2035.”

Near-term recovery is brownfield-led and gradual

Venezuela’s production peaked at over 3 million bpd historically but had fallen to around 1.1 million bpd by 2025 following years of underinvestment and deteriorating infrastructure.
The 17-project framework identifies nine brownfield redevelopments and eight Orinoco greenfields.
Rystad expects the first incremental barrels to come from the brownfield assets, where existing wells and facilities provide a faster route back to production.
In our scenario, brownfield output rises from around 157,000 bpd in 2027 to 680,000 bpd by 2030, reaching around 740,000 bpd in the early-to-mid 2030s.
The pace will depend on how quickly operational bottlenecks are resolved, including the return of rigs and oilfield services, well workovers, infrastructure rehabilitation and diluent supply for extra-heavy Orinoco crude.

Greenfield production and the bulk investment come after 2035

Rystad assumes meaningful greenfield Orinoco production only from around 2035, with output reaching roughly 840,000 bpd by 2040 and approaching 2 million bpd by 2050.
In the combined scenario, total Venezuelan output reaches 2.3 million bpd by 2035 and just above 3 million bpd by 2050.
The associated investment is similarly backloaded: around $21 billion during 2027-2035, followed by around $64 billion in the 2036-2040 window.
Proposed fiscal changes for the Orinoco greenfields, including minimum royalties of 16% and a corporate tax rate of 34%, lower project breakevens by 7-13% in Rystad’s modelling, a meaningful improvement that does not by itself make Venezuela competitive against other global upstream opportunities on cost and execution terms.

Political and geopolitical risk remain material

The agreement has drawn criticism from across Venezuela’s political spectrum, with protests in Caracas and opposition from both Chavista and non-Chavista quarters.
A future government with a new electoral mandate could face pressure to renegotiate fiscal terms or revisit development rights, creating contractual risk for companies evaluating long-cycle investment decisions.
Venezuela is also reportedly considering an OPEC exit as its relationship with Washington deepens.
For now, that would be largely symbolic, since OPEC quotas are unlikely to constrain the initial recovery.
If production does rebuild substantially, however, Venezuela outside OPEC would represent a significant source of future supply beyond the group’s ability to manage.
The deal also directly displaces China, previously Venezuela’s largest crude buyer and a major creditor, representing a significant strategic reorientation with implications beyond the oil sector.

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