Key facts
- Venezuela's oil and gas production infrastructure was largely intact after twin earthquakes in late June.
- The earthquakes killed over 3,800 people and are expected to rise.
- New oil regulations approved by interim president Delcy Rodriguez aim to provide resources for recovery.
- These regulations reduce the state's share of earnings and production to 20-35% for most projects.
- Public disapproval of the Rodriguez administration rose to 63% following the quakes.
- Investor uncertainty is seen as a greater impediment to upstream development than earthquake recovery.
Venezuela's oil and natural gas production infrastructure has largely withstood twin earthquakes that struck in late June, causing thousands of deaths and significant destruction in areas like La Guaira. The country's key oil operations in the Orinoco belt and around Lake Maracaibo are located outside the hardest-hit regions.
Despite the disaster, crude production has continued to increase, reaching 1.2 million barrels per day in June, with government aims to reach 3 million barrels per day by 2030. Interim president Delcy Rodriguez has approved new oil regulations designed to attract investment and provide resources for the nation's recovery. These reforms simplify taxes, reduce the state's share of earnings and production to 20-35% from a previous standard of 83.33%, and aim to create more defined royalty tiers.
However, the earthquakes have also shifted the political landscape, with public disapproval of the Rodriguez administration rising to 63% following the disaster, and 65% disapproving of the government's earthquake response. Analysts suggest the disaster could either offer a temporary reprieve or catalyze a democratic transition. The US has indicated a priority on stability, with President Donald Trump expressing solidarity with Rodriguez and committing to aid, while also maintaining existing policies that affect opposition leader Maria Corina Machado.
Investor uncertainty remains a significant hurdle for upstream development, with many potential new entrants wary of contract terms and commercialization processes. Cash flow issues, including disbursements via a US Treasury Department fund, also persist. For many Venezuelans, the immediate concern is the restoration of basic services like natural gas for cooking.