Por Francisco J. D’Angelo Ohep y Rafael Daryanani D.

This year, when discussing Venezuela’s financial and energy issues, the main topic is balancing the country’s budget after many years of opacity and imbalances. To achieve this, it was necessary to consider eliminating expenses and increasing revenues, taking into account a previous budget structure based on handouts and social programs, and in light of a 75% reduction in the gross domestic product (GDP) in the last decade. Given this scenario, the challenges were and continue to be enormous. Where does one begin with a task of this magnitude? And where did the consideration of solutions begin at the start of the year?

Based on that premise and those questions, it is understood that the possibility of rapidly increasing the country’s oil production—both crude oil and intermediate and refined products—was considered, as well as seeking a new structure for the sector through the opening and modification of the Hydrocarbons Law. This entire scenario was marked by the tragic earthquakes of June 24 and their serious consequences for the entire nation, in addition to understanding and acknowledging a diaspora of 8 million Venezuelans scattered around the world. These lines use publicly available information from this year to better understand the state of the national energy market after many years of incomplete, partial, and truncated figures and statistics.

In the media effort to promote the country’s opportunities, we – most of us – forget to analyze in detail the requirements to achieve that increase in oil production (the most immediate and almost only source of national income to implement quickly), taking into account the state of the oil industry’s infrastructure and its major challenges, as well as the infrastructure needed in the country to grow the GDP in an organic way.

Without a doubt, one of the Gordian knots was the Hydrocarbons Law, the modification of which turned out to be easier than expected, given the interest of all parties involved in the decision. The most important practical obstacle that the country faced was the supply of electricity needed to operate the National Petroleum Industry (IPN) and continue to supply the rest of the country. Electricity is synonymous with prosperity: it makes it possible to maintain jobs and generates business opportunities, ensuring a minimum quality of life for most of the population connected to this public service. This obstacle was quickly recognized as a business opportunity and an investment opportunity. The National Electric System (SEN) became the daily focus of attention for the population due to its influence on daily activities.

Given this reality and scenario, a brief summary of the current situation is presented, as of October 2026, regarding the state of the Venezuelan energy industry. The intention is NOT to conduct a thorough and specific examination or analysis for a particular sector of the country’s economy, but rather to provide an overview of what has been done at the IPN and SEN to date, and to identify the immediate and future challenges.

– Currently, approximately 175,000 barrels of refined products and 1.25 million barrels of crude oil are produced daily. The surplus is exported. Considering the historical peak production of 3.2 million barrels of crude oil per day, and the refining capacity of 1.2 million barrels per day (CRP, El Palito, and Puerto La Cruz), this indicates that we are still at the lowest point of the curve.

– During 2026, Venezuelan oil production increased from a low of 0.925 million to 1.25 million barrels per day today. This represents a significant increase of approximately 300,000 barrels per day, equivalent to almost one-third of the production in January. However, the increase in the last four months has been less than 5%, which suggests a very low increase in production. This has a logical and easy-to-explain reason, given that it seems we have reached a production plateau.

– Regarding the electricity supply, the IPN’s balance is critical. If previously the IPN consumed what it generated, and at times even supplied electricity to the SEN, today the IPN consumes between 1.67 and 2 GW and self-generates less than 1 GW. Therefore, the SEN (Corpoelec) supplies it with at least 1 GW of power so that it can operate daily. This reality is crucial to understanding – in part – the issue of the infamous “power dips” that we refer to colloquially.

– Recent analysis indicates that PDVSA’s power generation system, which historically reached a capacity of 2.7 GW, now requires maintenance work to operate efficiently again and prevent the SEN from delivering power to the IPN.

– When breaking down the IPN’s electricity consumption, the largest user is Exploration and Production, with 1 GW. The refining system requires 0.6 GW to operate at its current capacity, and the rest corresponds to Logistics and Terminals, with approximately 0.25 GW. In other words, the IPN currently depends on the SEN to operate, even at the low production levels in the 100-year historical oil production curve mentioned earlier. Indeed, the IPN’s dependence on the SEN will increase if oil production increases and more electricity generation units do not become operational at IPN facilities.

– Given the current situation at the IPN, it is necessary to relate these figures to the nominal electricity generation capacity of the SEN: 35 GW according to experts, and only 25 GW according to the government. Of that capacity, possibly between 13 and 14 GW are operational, if PDVSA’s generation is included. The figures tell the story on their own; you don’t have to be an expert to understand where the electricity gap lies in the country, especially if we analyze the demand.

– It is understood that electricity demand has increased in recent months and will continue to do so, largely if efforts to increase hydrocarbon production continue and other sectors of the country are reactivated, both those on the periphery and those independent of the IPN. Therefore, it can be stated that the current demand, exceeding 15–16 GW, exceeds (and will exceed) the supply, and that, consequently, electricity rationing is the only solution available at present. This is in addition to the partial return of the diaspora in the coming years, which would increase the baseline of electricity consumption, and with it, the blackouts/brownouts.

– Restoring the nominal generation capacity, whether it be 25 or 35 GW, requires a great deal of work. There are no easy solutions to the current supply shortage and imbalance in the SEN. Nevertheless, it is worth mentioning that the task is understood and known, and that all possible actions have been taken to put the feasible generation capacity into operation efficiently and safely. As the SEN is a public service, even if it operates as a state monopoly, it places a major responsibility on the government, with ongoing actions in the short, medium, and long term.

– In the end, the nation’s budget, oil revenue, and electricity expenditure are closely related; the intention is to turn it into a virtuous cycle through efficiency, discipline, and teamwork. The alternative should not be considered.

– The perception that power outages and rationing have worsened this year is based on reality. The need to get the IPN, the Venezuelan refining system, up and running, and to achieve a minimum balance of fuels dependent on the SEN, has added extra stress. Additionally, increasing crude oil production by more than 30% and generating foreign exchange through the export of more than one million barrels of crude oil via transmission logistics has pushed the SEN to its limits. This creates critical situations and potentially more power outages due to failures in SEN equipment.

– In this area, the most important actions required in the future will include increasing electricity generation and maintaining the transmission lines and substations of the SEN, in order to improve the distribution of electrical power.

– As a final point in this phase, Venezuela’s refining system is operating at only 15% of its capacity (CRP and Puerto La Cruz). It produces just enough gasoline, diesel, and jet fuel to keep the country’s vehicle fleet and transportation logistics running. Let’s imagine, in a positive way, that the country’s refining system gradually recovers, and therefore its operation will require more electrical energy. The requirements will accumulate on the SEN.

– By the way, the remaining barrels produced by refining at the IPN do not correspond to conventional refined products, but rather to byproducts of the Orinoco Belt’s upgrading processes, such as asphalt, fuel oil, and low-quality naphthas. Their volume is similar to the 175,000 barrels of refined products already mentioned. These byproducts are used in the domestic market when required or are exported. Their transportation and distribution to the domestic or international market involve electricity consumption by the IPN.

– The latter has made it possible to reduce imports of refined products, but not of high-quality naphthas used as diluents to increase the production of crude oil from the Orinoco Belt, which amounts to approximately 80,000 barrels per day. Even so, the reduction in imports of conventional refined products (mainly gasoline and diesel) is a sign of stability and certainty in the local market. Nevertheless, the purpose of these lines is to reinforce the conclusion that the IPN is a major consumer of electricity and, at this time, the provider of the foreign currency that the country needs for its reconstruction.

If we want to reach a conclusion about our national energy system by October 2026, we could talk about stability at a low point on the curve, but with a positive trend toward continuing to balance priorities. In this scenario of improvements in the IPN and an SEN pushed to its limits, a wide variety of companies have made significant efforts to improve their efficiency and management. This is despite the conditions of the current operating framework, which includes a poorly functioning Venezuelan financial system, as well as the restrictions (necessary for now) and bureaucratic procedures associated with the OFAC licenses from the U.S. Department of the Treasury. In another article, we could discuss in detail why OFAC licenses are necessary, but that would require much more space and writing.

Returning to the SEN, the task has been very difficult, and meeting even the minimum expectations of the resident population in the country, and the diaspora, has been even more challenging. Nevertheless, it should be noted that all these tasks have been carried out with great effort by many individuals and companies, combining financial institutions, oil and electricity service companies, equipment manufacturers, among many others.

When considering what has been achieved so far and the work carried out in recent months, the following key activities in the national energy sector are worth highlighting:

– Commencement of review, analysis, and audit activities for key facilities of the IPN and SEN, driven by various political, business, and governmental sectors.

– Visits by high-level company representatives to the country, along with personnel from the governments of the United States and Venezuela, on widely publicized tours (GE, Siemens, etc.).

– Other companies, understanding the opportunity, have conducted private visits to inspect critical infrastructure facilities where their equipment is still operating or previously operated. These include some well-known companies such as ABB, AEG, Honeywell, Exxon, Conoco, ENI, Shell, SLB, Baker and Hughes, Weatherford, Repsol, and Emerson.

– The gradual and partial normalization of the country’s financial and banking processes is necessary in order to utilize available resources to address the large number of needs. It should be remembered that we are coming from long periods of hyperinflation and chronic devaluation of the Bolívar (14 zeros since Black Friday in 1983).

– Maintaining, rehabilitating, and utilizing existing equipment in the country, managing significant inventories of spare parts and accessories required by the SEN and the IPN, and making specific purchases to restore the productive energy infrastructure using minimal capital and investment. These activities have increased as priorities and opportunities are identified that generate cash flow to finance the work, because there are no credit lines or clear investment frameworks in the country.

In summary, the overall objectives of these initiatives have been to stimulate the economy, increase exports, reduce imports, improve the country’s logistical security, and strengthen both the IPN and the SEN. Obviously, achieving a balance has been difficult, and there have been multiple priorities.

Priority has been given to the efforts of consultants, auditors, maintenance companies, contractors, and reactivated workshops. All parties involved have participated gradually, as the aforementioned activity has increased and the corresponding payments have been made for the required and quoted work.

Given that any activity in the country must be financed with the income from daily operations, the amounts allocated to maintenance, rehabilitation, system and equipment recovery, and the purchase of materials must be commensurate with the level of activity restored. In economic terms, these are marginal growth or improvements financed through OPEX (Operating Expenses), that is, operating expenses. These improvements are often not visible to most of the population because they do not involve large new projects, which can generate skepticism while more visible actions are being carried out. The reality is that the current conditions in Venezuela only allow for this type of project, which in other countries is known, in the field of management, as “baby steps” or small steps. The general population and the diaspora experience this ambivalence and doubt about the slow progress on a daily basis, including power outages, low wages, the continuous devaluation of the bolivar (soon to reach 1000 Bs per dollar), and high prices. The harshness of this situation is evident every day and among the vast majority.

Given these considerations, it is evident that the achievements made so far, although important, must continue and be enhanced with larger investment flows, as confidence in the country and its recovery increases. This requires actions in the political and legal spheres, as well as in the areas of foreign investment, technology transfer, security, and the recruitment and retention of specialized personnel. These actions will require time, organization, money, and a vision that, initially, encompasses the medium term (3-5 years).

What comes next in 2027? What can we expect? How can larger-scale initiatives be promoted to revitalize the struggling Venezuelan economy and its energy sector?

Yes, there are different answers and perspectives to these questions, and they will depend on who answers them. Each answer will have a different degree of difficulty depending on the participants in the discussion and decision-making process for the coming months of activity.

The important thing is to continue working on measures that benefit our national energy system (SEN). It is crucial to keep critical activities running with a reasonable level of reliability until the national elections are held and the major investments the country needs can be considered. Recovery will require a great deal of collective effort, discipline, time, and investment.

Venezuela definitely has the resources and capabilities to continue on this path; however, understanding the speed of action and accepting the challenges and obstacles requires acknowledging a clear and straightforward diagnosis. One of the intentions of these lines is precisely that.

The momentum from the political arena will be crucial to maintaining course. The opportunity to discuss these issues in an open forum is helpful, and María Corina Machado’s return to the country is a boost in providing guidance and direction on the right path. Let’s continue to join forces and contribute from the diaspora. The publication of an electoral schedule will generate a great deal of interest in the recovery of Venezuela among international and national investors. This general demand is undeniable.

Francisco J D´Angelo Ohep is a Venezuelan lawyer and Legal Director of Venemex, the Association of Venezuelans in Mexico (venemex.org). He holds a Master’s degree in International Law from the Ibero-American University of Mexico City. Rafael Daryanani D. is an Electrical Engineer specializing in Power Systems at the USB, Caracas, and holds Master’s degrees in Engineering Management from Nottingham University and Imperial College University of London.  Energiesnet.com does not necessarily share these views.