Cardon, located on the Paraguana Peninsula, has recently played a key role in refining heavy crude from the Orinoco Belt. But the power outage once again exposed the fragile state of Venezuela's oil sector, The Rio Times reported Monday.
Of Venezuela's six refineries, only five remain operational, all running at no more than 20% of total capacity. The country's aging refining system, plagued by frequent shutdowns and low output, has deteriorated after years of underinvestment, poor management and international sanctions that have limited access to spare parts.
Venezuela holds one of the world's largest crude oil reserves -- more than 300 billion barrels -- and was once a leading global producer. But output has plunged over the past two decades, with the decline accelerating under President Nicolás Maduro's administration.
Production began falling early in the Chavaz era, dropping from about 3 million barrels per day in 2000 to 2.3 million by 2013-2014, despite high oil prices at the time, according to the Economics Observatory. The downturn worsened between 2015 and 2017, and by 2018 output had fallen to 1.2 million barrels per day.
The industry bottomed out after the United States imposed oil sanctions in 2019. By mid-2020, production had dropped below 400,000 barrels per day -- a historic low, just 10% of peak levels. Some recovery followed, with output averaging 760,000 barrels per day in 2023 and 868,000 in 2024, according to OPEC data.
In April 2025, Venezuela's oil production rose slightly to 888,000 barrels per day -- still far below the 3.4 million barrels it produced in 1998, when the country accounted for nearly 5% of global supply and ranked as the world's seventh-largest producer.
At the time, state-owned Petroleos de Venezuela S.A., or PDVSA, was seen as a model enterprise, recognized for its technical efficiency and contribution to public finances. Venezuela was a leading crude exporter, sending 41% of its output to the United States, then its top customer.
Oil revenue made up 98% of the country's export earnings and about half of government income, fueling extensive public spending during the oil boom.
Several factors have driven the collapse of Venezuela's oil industry.
For years -- particularly under Chavaz and Maduro -- the government failed to invest in maintenance or expand refining capacity. That prolonged neglect left the industry vulnerable to breakdowns like the recent shutdown at Cardon.
The decline worsened after Chavaz dismissed 18,000 PDVSA employees -- nearly half the workforce -- for protesting state control of the company. The purge triggered a massive loss of expertise that the firm never recovered.
The 2014 collapse in global oil prices dealt a heavy blow to Venezuela. The government sharply increased its debt -- external liabilities now exceed $150 billion -- and began printing money to cover deficits, triggering hyperinflation that reached as high as 130,000% in 2018. In that environment, PDVSA lost access to investment capital, deepening its operational decline.
Beginning in 2017, the United States imposed financial sanctions on Venezuela, followed by oil sanctions in 2019 aimed at pressuring the Maduro administration. The measures cut PDVSA off from global financial systems and blocked access to major markets, accelerating the drop in production.
In 2025, the Trump administration revoked a general license that had allowed Chevron to continue operating in Venezuela. In May, the administration moved from authorizing limited production to fully revoking the license, reducing Chevron's presence to basic asset maintenance with no output or exports.
The economic fallout from Venezuela's collapse in oil production has been severe.
Oil revenues fell 93% between 2012 and 2020, leaving the country without the foreign currency needed to import essential goods. The result was a near-total breakdown of its productive capacity.
Living standards fell 74% between 2013 and 2023, according to the Council on Foreign Relations -- one of the steepest declines ever recorded outside of war. Hyperinflation erased wages and savings, and more than half the population remains in poverty. Millions have emigrated amid a prolonged lack of opportunity.
The blackout at the Cardon refinery has become a stark symbol of Venezuela's oil sector -- an aging infrastructure pushed to the brink, a shadow of its former strength weakened by institutional collapse and international isolation.
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