The past and potential of Venezuela’s oil sector, and what it means for Canada

CALGARY – U.S. President Donald Trump’s ambition to have U.S. energy companies swoop in and revive Venezuela’s beleaguered oil industry has raised questions about what it means for Canadian oilsands producers and whether it’s a task American supermajors can or even want to take on. 

Here is a rundown of the past and potential of Venezuela’s energy sector: 

There’s a gargantuan amount of oil in the ground.   

The U.S. Energy Information Administration says that as of 2023, Venezuela had 303 billion barrels of proven crude oil reserves — 17 per cent of the world’s total and the largest of any country. 

Venezuela holds greater reserves than Saudi Arabia, the second largest, and Iran at No.3. Canada has the world’s fourth largest proven crude oil reserves at 163 billion barrels, the vast majority in Alberta’s oilsands, Natural Resources Canada says. 

Pumping that oil out of the ground is another matter.

As in the oilsands, Venezuelan crude can’t simply gush out of a hole in the ground. It’s considered extra-heavy, meaning it takes more work to make the sludgy, sticky oil thin enough to flow through a pipeline. It also requires extra processing and specialized equipment to refine into products like gasoline and diesel. 

Canadian oilsands crude faces many of the same challenges, a reason it sells at a discount to light oil like that produced in Texas. But Venezuela’s industry has been hampered by budget constraints, crumbling infrastructure and lack of qualified workers who know how to work with the tarry oil. 

As of November 2025, Venezuela reported production of 1.14 million barrels a day, according to the Organization of the Petroleum Exporting Countries. The Canada Energy Regulator says this country’s production far eclipses that, hitting a record of 5.13 million barrels a day in the first six months of 2025. 

Venezuela used to be a top oil supplier to the U.S., but it’s been mostly shut out. Enter Canada. 

In the mid-1990s, the U.S. was the largest importer of Venezuelan crude, the EIA says. Refineries along the U.S. Gulf Coast were set up to handle that heavy oil. This was before fracking technology unleashed huge amounts of light oil from Texas shale. 

The United States has a history of sanctions against Venezuela, but ones levelled against its state oil company in 2019 all but halted exports to the U.S. Canadian supplies have in recent years been filling some of the gap, with about 400,000 barrels a day now able to flow to the lucrative Gulf Coast market. That’s a fraction of the 4.4 million barrels a day Canada exported to the U.S. overall as of October 2025 (most goes to the Midwest, where refineries are also geared for heavy crude).   

As of 2023, China received more than two thirds of Venezuela’s crude exports, the EIA says. 

U.S. sanctions were eased somewhat in 2022, enabling Chevron to resume exporting crude from joint-venture operations it has with Venezuela’s state-owned oil firm. Imports from Venezuela to Gulf Coast refineries picked up again in 2023 in relatively small amounts — about 135,000 barrels per day as of October 2025. 

Analysts have said a meaningful return of Venezuelan crude to the U.S. market could knock down Canadian heavy oil pricing in the near-term, but that can be offset by exporting more to Asia via the Trans Mountain pipeline on the West Coast. The price of Western Canada Select, the blend coming out of Alberta, has indeed weakened in recent days. The way pipelines are currently configured, there’s little risk of Venezuelan crude supplanting Canadian exports to the Midwest. 

U.S. supermajors’ return to Venezuela is far from guaranteed. 

Trump met Friday with U.S. and international oil executives at the White House, promising them “total safety” if they were to operate in Venezuela. 

“Our giant oil companies will be spending at least US$100 billion of their money, not the government’s money. They don’t need government money. But they need government protection,” he said. 

ExxonMobil CEO Darren Woods said Venezuela is “uninvestable” currently. 

“And so significant changes have to be made to those commercial frameworks, the legal system, there has to be durable investment protections and there has to be change to the hydrocarbon laws in the country.”

Large U.S. oil companies have so far largely refrained from affirming investments in Venezuela as contracts and guarantees need to be in place. 

On Wednesday, the U.S. Department of Energy said it’s “selectively rolling back sanctions” to allow Venezuelan crude to be sold in global markets. It’s also authorizing some oilfield equipment, parts and services to enter the country. U.S. diluent — light oil — is being sent to Venezuela to blend with the heavy crude, enabling it to be transported. 

The U.S. also aims to sell between 30 and 50 million barrels of sanctioned Venezuelan oil in global markets “for the benefit of the United States, Venezuela and our allies.” 

Trump has said he thinks Venezuela’s decimated oil industry could be rebuilt in less than 18 months with U.S. support. 

U.S. majors once active in Venezuela — ExxonMobil and ConocoPhillips — have been burned by past investments there. Their operations were among hundreds of private businesses and foreign-owned assets nationalized by former president Hugo Chavez in 2007. International arbitration panels ordered Venezuela to repay billions of dollars to both companies, but the debts have yet to be collected.

Rystad Energy has estimated it would take US$54 billion of oil and gas investment over the next 15 years to keep Venezuela’s oil production flat, and that with further investment over two to three years, an additional 300,000 barrels per day could be added. Going beyond 1.4 million barrels per day would require another US$8 billion to US$9 billion per year, the group said. 

Global oil prices might also dampen companies’ appetite. North American benchmark oil has been trading at a lacklustre sub-US$60 per barrel level and U.S. players might not be so keen to have more crude flow into an already oversupplied market and eat further into their already squeezed margins. 

This report by The Canadian Press was first published Jan. 9, 2026.

— With files from The Associated Press.