Venezuela: Oil Reserves and Economic Crisis

• Venezuela lies on the north coast of South America, facing the Caribbean Sea.
• It borders Colombia, Brazil and Guyana. Its capital is Caracas.
• It holds the world’s largest proven oil reserves, about 303 billion barrels by OPEC’s estimate.
• Most of it lies in the Orinoco Belt, along the Orinoco river.
• But much of it is extra-heavy crude. It is far harder to pump and refine than Saudi Arabia’s lighter oil.
• It was a founding member of OPEC in 1960.

Imagine a farmer with the biggest field in the village. But the soil is rocky, the tractor is broken, and the bank won’t lend. The big field doesn’t feed the family. Venezuela’s oil is a bit like that field.

• The country came to rely on oil for almost all its export income.
• The state oil company, PDVSA, got too little investment and was badly run. Output fell sharply.
• In 2014, world oil prices crashed. Government income collapsed.
• The government printed money to pay its bills. That led to years of hyperinflation.
• US sanctions later cut off oil sales and loans.
• Since 2013, the economy has shrunk by roughly 80%.

• By 2024, over 7.7 million Venezuelans had left the country.
• It is one of the largest displacement crises in the world.
• Most went to neighbours such as Colombia and Peru. This strained their schools, hospitals and jobs.
• OECD data showed Venezuelans among the top groups seeking asylum in 2024.
• People left because there were no jobs, no food and no medicine. Politics was in turmoil too.

• On 3 January 2026, the United States carried out strikes in Venezuela and captured President Nicolás Maduro.
• Vice President Delcy Rodríguez was sworn in as acting president on 5 January. (Al Jazeera)
• She is the first woman to hold the country’s top office.
• In January, she proposed changes to the hydrocarbons law. The aim was to draw foreign oil companies back in.
• For 25 years, the old rules had favoured state control and nationalisation.

ONGC gets a US licence (August 2026)

• ONGC got a licence from the US Treasury’s Office of Foreign Assets Control (OFAC).
• OFAC is the US body that runs sanctions. The licence lets ONGC resume full operations in Venezuela.
• For years, ONGC had held back there because of sanctions risk.
• Its overseas arm, ONGC Videsh, holds 40% of the San Cristobal project. PDVSA holds the rest.
• It also holds 11% of the Carabobo project.
• ONGC hopes to recover over $500 million in pending dividends. It may also take over running some projects from PDVSA.

Why it matters for India

• India imports most of its crude oil.
• The 2026 disruption at the Strait of Hormuz showed the risk of relying on West Asia.
• Venezuelan oil helps India diversify its supply.
• San Cristobal produced only about a tenth of its potential in 2025-26. So there is room to grow.

(Source: The Hindu; The Pioneer)