Venezuela Helped Build OPEC. Now It May Help Break It Apart
Venezuela helped create OPEC. More than six decades later, it is considering walking away, and Washington appears perfectly happy to hold open the door. Caracas is weighing whether to leave the Organization of the Petroleum Exporting Countries, Bloomberg reported Friday, citing people familiar with discussions that have included U.S. officials. No final decision has been made. Venezuela produced…
Venezuela played a pivotal role in the formation of OPEC six decades ago. However, it may now contemplate leaving the organization, with Washington reportedly open to the idea. According to Bloomberg, discussions involving U.S. officials have been held on the matter. Last month, Venezuela produced approximately 1.117 million barrels per day, but it is currently exempt from OPEC quotas due to sanctions, underinvestment, and economic challenges.
The nation was among OPEC's original five members when it was established in 1960 and played a crucial role in its establishment. Nonetheless, its departure would occur shortly after the UAE's exit, which followed years of dissatisfaction with production limitations. Iraq is also considering leaving, having stated it might reconsider its membership if a capacity review does not lead to higher quotas.
The UAE, Venezuela, and Iraq together account for around 7 million barrels per day, representing roughly 32% of OPEC's overall output capacity, according to the latest Monthly Oil Market Report from OPEC. Venezuela and the UAE collectively produce 4.9 million barrels per day. Notably, discussions are underway between U.S. and Venezuelan officials to increase American involvement in the country's oil fields, potentially including a 100-year lease on some assets.
Chevron has already expanded its presence, while SLB and Hunt Oil have recently signed agreements with PDVSA, Venezuela's state-owned oil company. Venezuela possesses an estimated 303 billion barrels of proven oil reserves; however, restoring production levels will take years. Present agreements are anticipated to yield only minor increases in the near future.
OPEC is already grappling with the presence of additional U.S., Brazilian, and Guyanese supply, a decline in Russian influence, and a Gulf war that has left several members unable to produce near their capacity.
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