The dramatic arrest and extradition of Venezuelan President Nicolás Maduro on Saturday has triggered a significant shift in global energy dynamics, with direct implications for Canada. United States President Donald Trump promptly called for American oil companies to invest billions in rehabilitating Venezuela's crumbling energy infrastructure. This move signals a potential realignment that could disadvantage Canadian energy interests.
The Staggering Scale of Venezuela's Oil Wealth
Venezuela sits atop the world's largest proven crude oil reserves, estimated by OPEC at a colossal 303 billion barrels. This figure represents nearly 19 percent of global reserves, surpassing even Saudi Arabia (267 billion barrels) and Iran (209 billion barrels).
While Canada ranks fourth in global reserves, OPEC's methodology, which excludes non-conventional oil like oilsands bitumen, significantly undercounts its potential. OPEC pegs Canadian reserves at a mere 4.3 million barrels, whereas Natural Resources Canada and the U.S. Energy Information Administration estimate a far more substantial 170 billion barrels.
A key similarity between the two nations is the nature of their resources: both hold vast deposits of bitumen-rich heavy crude oil, which is more complex and costly to extract and refine. Venezuela's untapped wealth is primarily located in the Orinoco Belt, a region spanning over 55,000 square kilometres.
A Fallen Giant: Venezuela's Production Decline
Venezuela's oil story is one of unfulfilled promise. It ascended to become a top global producer in the 1970s, with output peaking at over three million barrels per day in the late 1990s. Decades of decline followed, driven by slumping prices, crippling U.S. economic sanctions, a sweeping government nationalization program, and profound resource mismanagement.
"Venezuela can obviously produce much, much more oil … with freer, unsanctioned access to global markets, and a flood of inbound investment," noted Rory Johnston, an oil market analyst at Commodity Context. "But decades of underinvestment and resulting loss of operational expertise has rotted the physical infrastructure that underpins the industry."
Consequently, Venezuela now contributes less than one percent of daily global crude supply. In 2024, it averaged just 921,000 barrels per day. For context, Saudi Arabia produced 8.9 million, and Canada, using Natural Resources Canada's criteria, produced over five million barrels daily. Despite this low output, oil remains the lifeblood of Venezuela's economy, accounting for 80 percent of its exports and 17 percent of its GDP.
Immediate Ripples and Long-Term Risks for Canada
The U.S. action sent immediate shockwaves through Canadian markets. On Monday, share prices for major Canadian energy firms—including Suncor Energy Inc., Cenovus Energy Inc., Enbridge Inc., Imperial Oil Ltd., and Canadian Natural Resources Ltd.—experienced a dip before recovering somewhat on Tuesday.
The longer-term concern for Canada is clear. President Trump's directive suggests the U.S. administration "will clearly favour its own companies investing in Venezuela at the expense of others." This potential preferential access for American corporations to one of the world's largest oil reserves could marginalize Canadian companies, redirecting critical international investment capital away from projects in Alberta's oilsands and elsewhere in Canada.
Analysts warn that Canada must adopt a proactive strategy. The unfolding situation in Venezuela underscores the intensely competitive nature of global energy investment. If U.S. firms secure dominant positions in revitalizing Venezuela's industry, Canada could face heightened competition for market share and capital, necessitating a strategic response from both industry leaders and policymakers to safeguard the sector's interests.
