Russia is interested in increasing its oil production through projects in Venezuela, Russian deputy prime minister Alexander Novak said on Thursday, according to TASS.
Novak met with Venezuela’s oil minister Tareck El Aissami in Caracas on Wednesday.
Unrecognized as Venezuela’s legitimate president by 50 countries, including the United States, Nicolas Maduro and Russian President Vladimir Putin have been long-term allies—one of Venezuela’s few allies, in fact. Russia has assisted PDVSA stop its freefalling oil production in recent years, although Rosneft has had to ditch some of its Venezuelan holdings as U.S. sanctions on Venezuela reached Russia.
Still, Russia has maintained its presence in Venezuela’s oil industry through new companies and creative workarounds, all designed to skirt sanctions. Russia has multiple oil JVs with Venezuela that employ hundreds of Russian workers and produce more than 120,000 bpd. Russia’s help and support—and Rosneft’s heft investments in Venezuela–following Maduro’s election has likely helped Maduro stay in power while much of the world pressed for his downfall.
But with Chevron’s new U.S. permission to resume oil production in Venezuela, the seams of Russia’s alliance with Venezuela could begin to weaken as the United States offers Venezuela another way to increase its abysmal crude production.
In September, Venezuela’s PDVSA seized a 40% stake in a critical oil JV from GPB Global Resources—a private energy firm founded by former Gazprom officials. PDVSA took full control and replaced the entire board, ripping more seams of the alliance.
Venezuela—like Russia, an OPEC+ member—has seen its oil production fall to 656,000 bpd in November from more than 2 million bpd several years ago. Despite sanctions on Venezuela’s oil industry, the country has managed to sell $2.5 billion worth of crude oil to Russia last year—much of which was used to pay down debt.
Venezuela holds the largest petroleum reserves in the world but is one of OPEC’s smaller producers due to Venezuela’s corruption, lack of investments and mishandling of its oil industry, and U.S. sanctions.