A top aide to Venezuelan opposition leader Juan Guaido said on Friday it could take up to eight years to restore oil production in the country back to full capacity.
Following years of corruption and mismanagement, the strife-torn Andean nation has seen oil production plummet to their weakest levels in decades. Meanwhile, a political and humanitarian crisis has converged with civil conflict that have sent the economy into a deep downturn.
Juan Andres Mejia, deputy of Venezuela’s National Assembly and Commissioner of a plan created to revitalize Venezuela’s economy and petroleum industry, said international sanctions and the financial collapse brought on by Venezuelan President Nicolas Maduro had left the country’s key economic driver deeply underfunded.
“It is impossible to recover the Venezuelan oil industry and Venezuela as a whole without the aid of the private sector,” Mejia told Yahoo Finance on the sidelines of the United General Assembly in New York. “Venezuela cannot increase its oil production if it wants to control all of its oil production as it is right now.”
The country is home to the world’s largest oil reserves and at its peak in 2014 produced nearly 3 million barrels a day, according to OPEC data, which accounted for 90% of Venezuela’s export revenue.
Yet those volumes have since fallen dramatically, following the collapse of global oil prices and economic pressure enacted to pressure the Maduro regime. Earlier this year, the U.S. Treasury Department imposed sanctions on state-owned oil company PDVSA, cutting off exports to the U.S. market.
That has pushed oil production down to 600,000 barrels a day, according to Mejia.
“We need to partner with the private sector [but] even that is not enough,” he said. Despite international opposition to Maduro’s rule, Mejia said that the country needs assistance from global institutions like the International Monetary Fund, the Inter-American Development Bank and the World Bank.
“This is not about one person. This is about a recovery plan that will last for years to come.”
Creating a ‘democratic system’
More than 4 million Venezuelans have been displaced under the Maduro regime, making it the largest humanitarian crisis in Latin American history, according to the United Nations Human Commission for Refugees. The UN projects the exodus will surpass that of the 6 million Syrian refugees next year, yet Venezuela has received a small fraction of the humanitarian aid internationally, in part because of concerns Maduro may interfere with distribution.
On Wednesday, the State Department committed $36 million in humanitarian aid dedicated to a U.N. program, while setting aside $52 million separately to fund Guaido’s government operations.
Mejia said funding the reconstruction of its oil industry, is half the battle. It also requires opening up the country’s energy sector to foreign investment, reversing the industry’s nationalization under late President Hugo Chavez.
The opposition-controlled Congress is currently considering a proposal that would allow private companies to hold majority stakes in joint ventures with PDVSA, according to Reuters.
“We want to create a democratic system, we want to create political stability in order to open our economy to private companies including foreign investments and national investments,” said Carlos Vecchio, the Ambassador to the U.S. for the Interim Government of Venezuela.
“We will use the oil sector to boost our stability and to also bring social stability so they people can stand in line to take advantage of the economic opportunities that we will create,” he added.