The Organisation of the Petroleum Exporting Countries (OPEC) said that it will likely maintain its steady output of oil at its meeting on Sunday, delegates said, despite tensions among members and the US attack and capture of the president of founding member Venezuela.
Eight member countries-Saudi Arabia, Russia, the UAE, Kazakhstan, Kuwait, Iraq, Algeria and Oman-had agreed in November to pause production hikes for January to March. The policy will remain unchanged, according to the sources.
Venezuela’s oil sector is set to face major upheaval the as the change of government occurs.
There are reports that OPEC+ could change its stance as the US made clear that its operation in Venezuela, was in part, to take control of the country’s oil.
Venezuela has the largest known oil reserves in the world, with the equivalent of 300 billion barrels. It tops the No. 1 OPEC+ oil-producing country, Saudi Arabia. However, the country only produces a million barrels a day or roughly 1% of the global output compared to the 1970s when it produced 7 per cent. The US, meanwhile, produces 13 million barrels a day.
Venezuela’s top customer is China.
US President Donald Trump said that US will ‘run the country’ and make way for US oil companies to enter Venezuela.
"We're going to have our very large U.S. oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country," Trump said during a press conference on Saturday.
If the government change is successful in Venezuela, the country’s exports could grow.
The increased production in oil would bring down global oil prices, which is something that Saudi Arabia is not looking forward to, reported Bastille Post.
Analysts, however, say that a meaningful boost to crude oil production in the country is unlikely even if the US invests billions of dollars into the country.
Dilapidated structures and security concerns would hinder production. Venezuela's oil is also heavier and denser than other types of crude oil and would require special refineries. The countrys oil is also know as the is knwo as the "dirtiest oil in the world to produce when it comes to global warming," according to Paasha Mahdavi, associate professor of political science at the University of California, Santa Barbara.
Francisco Monaldi, director of the Latin America Energy Program at the Centre for Energy Studies at Rice University, who spoke to NPR, said Venezuela's oil is also less attractive for European countries with climate goals.
Venezuela also owes US oil companies billions of dollars, and the takeover would have given them an opportunity to recoup some of that. Companies like ExxonMobil and ConocoPhillips left Venezuela, and international courts had ordered the country to pay them $1 billion and $10 billion, respectively. Carcas have only been able to pay back a fraction of the sums.
Analysts say that the lack of legal contracts, viable permissions and political instability would make the country an unattractive place for companies to invest. US firms will find it difficult to return until they are assured payment and minimum security.
Ultimately Venezuala's oil production will only ramp up in five to seven years, if there is a peaceful transition of government, Thomas O'Donnell, an energy and geopolitical strategist, told Reuters.
