Fixing the Venezuelan oil industry will take time, money, and—most importantly—institutional change Francisco Monaldi Director of the Latin American Energy Program, Rice University’s Baker Institute In the short term, Venezuela’s oil industry will have a limited impact on global markets. The country currently accounts for less than one percent of world oil production. Over the medium and long term, however, a sustained recovery in Venezuelan output could make a meaningful difference. From a purely technical standpoint, Venezuela could produce four to five times its current level of roughly one million barrels per day. Achieving that outcome, however, would require more than a decade of consistent effort and investments exceeding $100 billion dollars. Geology is not Venezuela’s problem. The country possesses vast reserves, faces relatively low geological risks, and enjoys moderate extraction costs. Under an appropriate contractual and tax regime, oil production would be profitable even at prices as low as $25–30 per barrel. The real obstacles to investment are not found below ground but above it. They are political, regulatory, and institutional in nature. Over the past quarter century of chavismo in power, the Venezuelan state has repeatedly reneged on its agreements with foreign investors. Resource nationalism has restricted the role that international oil companies can play, undermining confidence and discouraging long-term commitments. The national oil company, PDVSA, is now effectively bankrupt and lacks the operational and financial capacity to lead a recovery on its own. Any significant increase in production would therefore have to be driven largely by foreign firms. For that to happen, several conditions must align. Venezuela would need stable and constructive relations with the United States and Europe, along with the permanent removal of oil sanctions. Investors would also need to perceive a minimum degree of political stability and, critically, a durable consensus among the country’s political leadership in favor of reopening the oil sector to foreign participation. Finally, a credible and competitive legal framework would need to be approved by a legitimate legislature and enforced by a legitimate executive. Some argue that sanctions relief alone could unleash a rapid influx of investment. In reality, sanctions relief is necessary but far from sufficient. Without firm legal protections, policy continuity, and political legitimacy, large-scale investments with long development horizons will not materialize. In the absence of genuine institutional change, Venezuela may still attract limited “low-hanging fruit” investments—projects with high short-term returns and fast cost recovery. While these could generate modest gains, they would do little to rebuild the industry or restore the country’s production capacity over the long run. Major projects requiring substantial capital and long maturities will remain out of reach. The central problem facing Venezuela’s oil sector is therefore not technical or geological. It is political and institutional. These realities are often obscured by wishful thinking or by actors seeking quick profits. A meaningful recovery is possible, but only if it is grounded in durable political change, credible institutions, and a long-term commitment to restoring investor confidence.