Venezuela's oil industry maneuvers through sanctions, channeling 90% of exports to China
In the face of ongoing US economic coercive measures, Venezuela's oil industry has been forging significant partnerships with Chinese companies, with the majority of its oil exports being redirected to China. These partnerships are primarily established under "productive participation contracts" (CPP), a flexible arrangement that allows private entities considerable operational control and is governed by Venezuela's 2020 Anti-Blockade Law.
Chinese firms such as China Concord Petroleum and Anhui Guangda Mining are reportedly involved in these CPP contracts, with the aim of boosting production mainly in Lake Maracaibo and the Orinoco Oil Belt. The investment plans total around $32 billion, and the production ceiling is near 945,000 barrels per day. However, these arrangements have sparked internal debate due to concerns about transparency and national sovereignty within Chavista ranks.
Despite the apparent prominence of Chinese partnerships, significant new Chinese investments in Venezuela’s energy sector appear limited. The China National Petroleum Corporation (CNPC) has declined offers to invest in new Venezuelan oil fields, partly due to past disagreements and payment delays from Venezuela's PDVSA. Instead, Chinese investment focus in the region seems more oriented towards neighbouring Guyana’s oil sector.
The US sanctions, imposed since 2017, have heavily restricted Venezuela's oil industry. However, a recent policy shift has seen the US government, under the Trump administration, prepare to authorize limited oil operations by companies such as Chevron, allowing restricted activities like paying contractors and swapping imports for Venezuelan oil. Despite this, these US measures do not directly affect the Venezuelan-Chinese oil trade, where Venezuela has adapted by focusing exports to China and bypassing Western firms.
In June 2025, Venezuela exported an average of 844,000 barrels per day of crude and refined products, up from 779,000 bpd in May. The oil production in Venezuela increased by 2,000 bpd from May to June 2025, with PDVSA reporting production levels of 1.069 million bpd in June. The price of Venezuela's flagship Merey blend also increased by 10% last month.
Venezuela's reliance on Chinese partnerships and export destinations has led to significant discounts on crude sales to China, with PDVSA using intermediaries to bypass US sanctions. This strategy, however, exposes spot oil exports to market volatility.
The US Treasury has blacklisted China Concord over dealings in Iran, adding another layer of complexity to the already intricate relationship between Venezuela and China in the oil sector.
In summary, Venezuela heavily relies on Chinese partnerships and directs most of its oil exports to China amid sanctions. Chinese firms participate under flexible CPP contracts, but large state-owned investments by CNPC are not currently planned. The US maintains sanctions but has begun allowing limited operations by Western partners like Chevron, which may impact Venezuela's oil dynamics indirectly. Venezuelan-Chinese energy cooperation continues, but major new Chinese oil investments in Venezuela remain uncertain.
- In the business sector, Chinese companies like China Concord Petroleum and Anhui Guangda Mining are involved in productive participation contracts (CPP) with Venezuela's oil industry, aiming to boost production primarily in Lake Maracaibo and the Orinoco Oil Belt.
- Despite significant partnerships with Chinese firms, the finance landscape for new Chinese investments in Venezuela’s energy sector seems limited, with the China National Petroleum Corporation (CNPC) declining offers to invest in new Venezuelan oil fields due to past disagreements and payment delays from PDVSA.
