After the daring arrest and extradition of Venezuelan President Nicolás Maduro on Saturday, United States President Donald Trump said he wants American oil companies to “go in” and “spend billions of dollars” to rehabilitate the South American country’s dilapidated energy infrastructure. Here, the Financial Post looks at the state of Venezuela’s oil industry and what the upheaval could mean for Canada.  

How much oil does Venezuela have?

Venezuela is home to the world’s largest proven crude oil reserves, with an estimated 303 billion barrels — around 19 per cent of global reserves — according to the Organization of Petroleum Exporting Countries (OPEC). T he next two biggest oil-rich countries are Saudi Arabia (267 billion barrels) and Iran (209 billion barrels).  

Canada would be fourth on the list, but because OPEC’s data excludes “non-conventional” oil, including the synthetic crude created by upgrading bitumen extracted from oilsands, the organization pegs Canadian reserves at just 4.3 million barrels. Other sources, including Natural Resources Canada and the U.S. Energy Information Administration, puts the estimate at 170 million barrels.  

Like Canada, Venezuela’s reserves are mostly bitumen-rich heavy crude oil, which is more difficult and costly to extract and process. Most of Venezuela’s untouched deposits are found in the Orinoco Belt, a strip of land in the country’s northeast that spans more than 55,000 square kilometres.  

How big is the industry?

Venezuela became one of the world’s top oil producers in the 1970s, with production peaking at more than three million barrels per day in the late 1990s. Since then, due to several factors including slumping oil prices, economic sanctions, the government’s nationalization scheme and mismanagement of its resources, the country hasn’t lived up to its potential.  

“Venezuela can obviously produce much, much more oil … with freer, unsanctioned access to global markets, and a flood of inbound investment,” Commodity Context oil market analyst Rory Johnston said in a report. “But decades of underinvestment and resulting loss of operational expertise has rotted the physical infrastructure that underpins the industry.”  

As a result, Venezuela generates less than one per cent of global daily crude. The country produced an average of 921,000 barrels per day in 2024, according to OPEC data. For comparison, Saudi Arabia, produced 8.9 million barrels per day, and Canada 1.5 million (though according to Natural Resources Canada’s criteria, the country produced an average of more than five million barrels per day).

Despite having the world’s largest reserves and limited output, Venezuela’s economy remains heavily dependent on oil, which accounts for 80 per cent of its exports and 17 per cent of gross domestic product.  

What does the takeover mean for Canada?

News of the U.S. attack on Venezuela caused share prices of Canada’s largest oil and gas companies  —  including  Suncor Energy Inc., Cenovus Energy Inc., Enbridge Inc., Imperial Oil Ltd. and Canadian Natural Resources Ltd.  —  to dip on Monday before recovering on Tuesday.  

Derek Holt, vice-president and head of capital markets economics at Bank of Nova Scotia, said in a note that U.S. and Canadian oil “picked up the slack” after Venezuela’s exports started drying up after 2000. Because Canada’s heavy oil is a “direct competitor,” Holt said it might be challenging if Venezuela can eventually rebuild production to higher levels than its past peak.  

“If — and it’s a big ‘if’ with a lot of uncertainty over time — U.S. access to Venezuela’s massive oil reserves should be restored and drive major investments, then it could be a bad development for the U.S. and Canadian oil industries (and others),” said Holt.  

However, Holt said, “greater caution is required” before jumping to the conclusion that Venezuela will “unleash a torrent of new supply on world markets” and overwhelm Canada’s oil industry.   

Holt cited several reasons for the caution: political uncertainty in Venezuela is “off the charts” and energy and broader infrastructure is “in shambles;” American and Canadian oil production has expanded; the global oil market currently has a surplus and Canada already has a strong hold on the U.S. market.  

Nevertheless, Holt said Canada needs to be proactive as  the U.S. “will clearly favour its own companies investing in Venezuela at the expense of energy companies from Canada and elsewhere.”   

“The prudent thing for Canada to do would be to act with a greater sense of urgency in terms of building capacity to export oil to Asia (arguably ditto for Mexico),” he said.  

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