Why Will Venezuela's Oil Production Increase Be Delayed Until the End of the Decade?

The ANZ Group (ANZ) has predicted that investors betting on a surge in Venezuela’s oil production will need massive financial resources and significant patience. According to Bloomberg, the country's decaying infrastructure requires billions of dollars in investments to recover. Strategists Daniel Hynes and Soni Kumari noted in a Tuesday memo that typical timeframes for boosting production will likely be longer in Venezuela than elsewhere due to the sector's unique challenges.

Investment Requirements: To maintain a production level of 1 million barrels per day (bpd), the South American nation likely needs annual investments exceeding $5.5 billion. Expanding capacity by an additional million barrels could cost between $10 billion and $30 billion for onshore fields, rising to $60,000 per bpd for deep-water offshore projects. Consequently, ANZ suggests that any impact from increased investment is unlikely to be visible before the end of the decade.

Political and Market Context: Energy stocks rose following the U.S. arrest of President Nicolás Maduro over the weekend. While President Donald Trump expects U.S. oil companies to help revive production in the country with the world's largest proven reserves, political instability remains a major risk. Currently, Chinese buyers are avoiding Venezuelan crude as the U.S. naval blockade restricts exports and inflates shipping costs, leading to a sharp decline in shipments to China last month.