5 golden opportunities in cooperation between Iran and Venezuela oil industry
According to Fars News Agency’s economic correspondent, Venezuelan President Nicolas Maduro traveled to Iran this week, during which he met with high-ranking officials and the President, met with the Minister of Oil, and signed a 20-year cooperation document with Iran.
The Republic of Venezuela, with an area of 916,000 square kilometers, is located in the shape of a large triangle in North and South America and has an important strategic position due to its barrier between Latin America and Central America and its rich natural resources. It is bordered by Colombia to the west, Baguia to the east, Brazil to the south, and the Atlantic and Caribbean Seas to the north. The country has a population of 28 million.
The Institute for International Energy Studies of the Ministry of Petroleum in a report entitled “Investigating the cooperation between the Islamic Republic of Iran and Latin American countries in the field of energyHas addressed the issue of cooperation capacities between Iran and Venezuela.
“Venezuela’s economy as a whole is dependent on oil and gas, and in 2021 its total nominal GDP was $ 73 billion, up about $ 23 billion from 2020,” the report said. In 2021, real GDP growth was 0.7%, while between 2014 and 2020, real GDP growth was negative.
Figure 1- Real growth of Venezuela GDP
* The latest state of Venezuela’s oil and gas reserves
In 2020, the total primary energy consumption in this country was 1.44 exajoules (figure 10 to the power of 18 joules), which is a decrease of 26.3% compared to 2019. In the last few years, total primary energy consumption in Venezuela has been declining, less than half of 2013.
Oil and gas account for the largest share of the country’s primary energy consumption. In 2020, the share of oil, gas and electricity-water in the country’s energy consumption basket was 34, 47 and 19 percent, respectively.
According to the latest estimates, the country has 303.8 billion barrels of proven oil reserves and 17.5% of the world’s proven oil reserves. In 2020, Venezuela’s proven natural gas reserves were 6.3 trillion cubic meters, or 3.3 percent of the world’s proven natural gas reserves.
* The process of production, consumption and export of Venezuelan oil under the influence of political developments
In March 2021, the total oil production of this country was 801 thousand barrels per day, of which 701 thousand barrels per day were crude oil and 100 thousand barrels per day were liquids and gas condensate. Venezuela’s oil production began at 1917 barrels per day in 1917 and reached 3.7 million barrels per day in 1970, which the country has never been able to reach.
Oil production began to decline in 1970, to 1.5 million barrels per day in 1985, but increased again in 1989 to 2.3 million barrels per day in 1992 and 3.1 million barrels per day in 1998.
With the coming to power of Hugo Chاvez (the late President) and the declaration of Venezuela’s commitment to OPEC, the country reduced its production level, and the political crises of Ch چvez’s time, especially the crisis of 2002 and 2003, negatively affected Venezuela’s production. Production level reached before Ch چvez’s presidency. In addition, US sanctions against the country have severely affected the level of production.
Figure 2 – Monthly production trend of crude oil and liquids and gas condensate from January 2000 to March 2022
In 2020, the country’s oil consumption was 242 thousand barrels per day, which is about 18.3 percent less than in 2019, and its average growth rate in the last 10 years has been -8.3 percent.
In 2020, the country’s gas production was 18.8 billion cubic meters, which is 0.5% of total world gas production. The average growth rate of gas production in the last 10 years has been -2.2%. In 2020, the country’s gas consumption was 18.8 billion cubic meters and all gas produced was consumed domestically.
* Venezuela oil and gas production prospects
Although Venezuela has the largest proven oil reserves in the world, due to political factors, the volume of production is not commensurate with the volume of reserves, and it is predicted that production will not change much in the next few years.
Fitch Solution estimates that Venezuela’s total oil production in 2021 will be about 554 thousand barrels per day and by 2030 will reach 715 thousand barrels per day. In addition, the institute estimates that Venezuela’s dry gas production will reach 24.7 billion cubic meters in 2021 and 29.6 billion cubic meters by 2030.
* Five opportunities for strategic cooperation between Iran and Venezuela
1- Cooperation in the field of development and upgrading of Venezuelan refineries for:
- Supply of domestic consumption of this country
- Shaping the product sales network according to the Latin American region’s need for the product
- Forming joint cooperation to weaken the grounds for sanctions
Venezuela’s refining sector is suffering from chronic wear and tear due to sanctions imposed on the country, and Venezuela’s domestic companies do not have the capacity to upgrade refineries.
In 2020, the country’s nominal refining capacity was 1.3 million barrels per day, but the country’s refining production was 123,000 barrels per day. By upgrading its refineries, Iran can refine some of its crude oil in its refineries and sell it in the Latin American market because its production is less than its refining capacity.
2- Establishing the infrastructure of a joint Iranian-Latin American study hub in the two countries, which will continuously review and follow up the fields of cooperation.
3. Venezuela, like Iran, is involved in unilateral US sanctions, and cooperation between the two countries and the use of mutual experience to mitigate the effects of sanctions can be one of the opportunities for cooperation.
4. Venezuela has the most proven oil reserves in the world, but its production is not commensurate with the size of its reserves. Therefore, there is room for Iranian companies in the upstream part of Venezuela.
“Iran and Venezuela are eight of the founding members of OPEC and have many common political views, so cooperation between the two countries in OPEC can be one of the areas of cooperation between the two sides.”
End of message / T632