The Cradle
Iranian assistance galvanizes Venezuelan oil industry
Cooperation between Venezuela and Iran has helped to mitigate the impact of US sanctions on the two countries
By News Desk - January 23 2022
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A Venezuelan oil worker holding a small Iranian flag attends a ceremony for the arrival of Iranian oil tanker Fortune at the El Palito refinery near Puerto Cabello, Venezuela, 25 May 25, 2020. (Photo Credit: AP Photo/Ernesto Vargas)

On 21 January, a US media outlet, the Miami Herald reported that in the last few months, Venezuela has managed to double its oil production as a result of assistance rendered by the government of Iran.

According to the publication, Venezuela produced about 900,000 barrels of oil per day in December 2021 compared to the less than 450,000 produced per day during the same period in 2020.

The Miami Herald said this significant increase is due to the steady supply of thinners from Iran.

Thinners manufactured in Iran have helped the Venezuelan state-owned oil conglomerate, Petróleos de Venezuela (PDVSA), to process the heavy crude oil extracted from Venezuela’s Orinoco Belt. Orinoco crude oil must be diluted with thinners before it can be sold on the world markets.

US sanctions on Venezuela prevent the country from easily accessing thinners on the international market.

Before the sanctions, PDVSA sourced most of its thinners from US companies. This became impossible when Washington banned US companies from conducting business with the Venezuelan oil company.

This led to a steep decline in oil production until mid 2021, when PDVSA signed a deal with the National Iranian Oil Company (NIOC) for the supply of thinners.

Under the deal, NIOC supplies PDVSA with the much needed thinners in exchange for Venezuelan heavy oil.

In August 2020, Iran also came to the aid of Caracas to tackle a crippling nationwide fuel shortage by sending five supertankers carrying millions of liters of diesel.

The cooperation between the two countries – both of which are victims of unilateral sanctions by the US – has helped Caracas to stabilize its economy, which has been battered by US sanctions for years.

In an address to the nation on 17 January, President Maduro said that in 2021 the Venezuelan economy registered positive growth, the first time since 2013.