Caracas' economy is still not recovering despite its return to international markets (oil)

Delcy Rodríguez, the acting president of Venezuela, spoke at an energy conference in Maracaibo, Venezuela, on October 17th. Rodríguez stated that Venezuela's oil industry would receive approximately $76 billion in investments over the next five years. Rodríguez also stated that 61 agreements had been completed with a further 44 currently under discussion. Amongst the agreements discussed was one with the U.S. that covered 17 oil fields. Only a week prior, at the annual assembly of Fedecámaras, the major business federation, Rodríguez made a similar pledge. Rodríguez additionally ruled out dollarization of the Venezuelan economy.

In 2018, figures such as these would have been unimaginable. What changed was the capture of Nicolás Maduro by U.S. forces in January 2026. This event was quickly followed by reforms to the Hydrocarbons Law. The reforms established a new contract type, the CPPH (Contrato de Participación Productiva de Hidrocarburos), which allows private companies to explore, extract, and export petroleum without having to partner with the state-owned oil company PDVSA. Unlike during the time of Hugo Chávez, when foreign firms were required to allow PDVSA to act as majority partners in all projects, entering into partnerships with PDVSA is now optional. The reforms also reduced taxes and royalties paid to the Venezuelan government and permitted international arbitration to resolve disputes between companies operating in Venezuela and the Venezuelan government. Companies operating in Venezuela have acted rapidly. Chevron agreed to invest $7 billion in increasing its extraction rate in Venezuela to approximately 600,000 barrels per day by 2031. Eni, an Italian energy company, acquired the rights to operate the Junín 5 oil field located in the Orinoco Belt. A California-based firm, Pacific Coast Energy, announced that it had reached agreements with PDVSA valued at approximately $3.5 billion. Furthermore, PDVSA hired the U.S.-based law firm Greenberg Traurig to help it negotiate multiple contracts at the same time. The government cites Campo Zamora as an example of a successful implementation of the new contract model. Before the new model was introduced, production at Campo Zamora averaged 20,000 barrels per day. Today it exceeds 100,000 barrels per day. Rodríguez states that total production for the entire state of Zulia has increased from approximately 70,000 barrels per day to approximately 370,000 barrels per day.

Although signing contracts is relatively simple, actually increasing production will take a lot more effort. Venezuela reported to OPEC that it produced approximately 1,206,000 barrels per day in September. However, the independent sources relied upon by OPEC reported that production was actually 56,000 barrels per day below that amount. The Venezuelan government plans to increase production to 1.4 million barrels per day by the end of this year and to 3 million barrels per day by 2030. However, analysts at Kpler estimate that production by 2030 will more likely be closer to 2 million barrels per day, due to a shortage of drilling rigs and deteriorated infrastructure. Even Chris Wright, the U.S. Energy Secretary, has only estimated over 2 million barrels per day by 2030. Junín 5 shows the gap between projected and actual production clearly. It contains approximately 35 billion barrels of oil in place but produces only about 12,000 barrels per day.

Additionally, questions remain about where the $76 billion will come from. Rodríguez provided no breakdown between public and private money, and neither Caracas nor Washington has released the full terms of their oil agreement. When Donald Trump announced the agreement in August, describing it as the biggest oil deal in history, the White House said the investment would be approximately $100 billion; however, no one has connected that figure to the $76 billion that Rodríguez referred to. Therefore, until contracts are made public, figures such as those cited by Rodríguez are projections rather than commitments.

As for why Washington is interested in supporting Venezuela's recovery, it is largely due to higher U.S. fuel prices caused by the war with Iran. The Trump administration wants more Venezuelan crude to supply U.S. refineries and therefore supports Venezuela's recovery. However, this support also raises the question of who will actually benefit from it.

To answer concerns about who will benefit, Rodríguez pointed to several measures aimed at creating local jobs. Rodríguez pledged that each contract with foreign companies will have to show how many Venezuelan workers and suppliers it uses, and pointed out a provision in the reformed Hydrocarbons Law that requires companies to include Venezuelan companies in their contracting. Rodríguez also linked part of the jobs figure to 250 drilling rigs under the agreement with the U.S., stating that each rig would employ approximately 200 workers. These are only pledges and do not guarantee that jobs will be created locally; furthermore, Rodríguez did not explain how she arrived at her claim that 324,000 jobs will be created.

Production is indeed rising, up by approximately 30 percent this year according to official figures; however, daily life is still very hard, as shown by the 467% inflation rate the International Monetary Fund (IMF) expects for this year. Consequently, regardless of how much the oil sector earns, ordinary wages continue to lose value at a rapid pace. Venezuelans have heard promises like this many times before. During the oil boom of the 1970s, Venezuela's oil revenues made the state rich but not the country itself. Ultimately, whether this time is different depends less on how many contracts are signed by December than on how much of the money from Venezuela's oil actually stays in the country.

Gustavo Gimenez (Year 13)