Oswaldo Felizzola: “There is not enough electricity to produce oil consistently”

VZ Economics (VZE): Can you describe how serious the electricity crisis really is?

Oswaldo Felizzola (OF): The numbers tell the story. Venezuela has around 32 gigawatts of installed generation capacity on paper. But today, less than 30% of that capacity is actually operating. In practice, we are using about 12% of the installed capacity at any given time. That’s why we have so many blackouts¹.

A World Bank-related study characterized it this way: 24 hours a day, seven days a week, at any moment, some region of Venezuela has no electricity. In Maracaibo [the most important city in western Venezuela], historically one of our main oil regions, blackouts can last more than six hours per day. In regions even further west, people can face 12 to 13 hours per day without electricity—more time without power than with it.  This is a systemic, nationwide failure, not an isolated local problem.

A Grid That Cannot Handle the Oil Being Produced

VZE: How does the grid situation affect the recovery of Venezuelan oil fields and their underlying infrastructure?

OF: Technically, it’s a very complicated situation. We are producing and exporting oil, but our system is not fully capable of transporting and storing it reliably.  We often have days where we export 2 million barrels one day and zero the next. That volatility reflects how unstable the system is.  A key reason is that there isn’t enough electricity to produce oil consistently. The power grid suffers frequent blackouts—to use a polite term for what is really a near-collapse in some parts of the system.

We estimate it will take five to ten years to recover production to around 3 million barrels per day, which was Venezuela’s historical maximum. Right now, according to OPEC, we are producing roughly 1.2 million barrels per day. The gap is enormous, and closing it will require major investment and new technology across many of our oil and gas fields.

Why the Oil Sector Is More Open Than the Electricity Sector

VZE: You’ve said the oil and gas sector is more open to private participation than electricity. Why is that?

OF: Venezuela has a long history of private-sector participation in oil and gas. Inside PDVSA, many people are quite open to business with private companies; the resistance was historically political, not technical.

Under Presidents Chávez and Maduro, a large share of oil income was diverted to social expenditures rather than capital expenditures in the sector. That starved the industry of reinvestment. Today, the Minister of Energy and senior people in PDVSA understand that they need the private sector. There are still political voices who criticize opening to foreign and especially American companies, but reality is much louder than ideology now. Those voices are getting quieter as the crisis deepens.   

In contrast, the electricity sector has been a much stronger monopoly. Historically, 100% of major generation and the main grid were run by state utilities, and there is far less institutional experience working with private operators. That’s why liberalization in electricity has been slower.

Gas Flaring, Monopolies, and Missed Opportunities

VZE: You mentioned that Venezuela flares gas instead of using it for power. Why is that?

OF: In Venezuela, oil is often produced with associated gas. That gas could be an important fuel for electricity generation, but our electricity sector is structured as a monopoly under the state company Corpoelec².

Corpoelec is financially incapable of investing in and upgrading the grid. The system was designed around a single national utility, which has neither the capital nor the flexibility to capture that gas and convert it into reliable power. As a result, large volumes of gas are burned off, or flared, instead of being monetized through power generation.

Interestingly, there has been recent news that IMPSA—originally an Argentine company, now owned by American investment funds—has been contracted³ to improve both the electricity grid and the hydroelectric system in Venezuela. The company has a history here. It worked in Venezuela in the 2000s but left when the government failed to honor its debts. Today, it is back as part of a broader debt restructuring and reform agenda.

Daily Reality and Public Attitudes

VZE: When local people are living with blackouts, does that make them more open to new ideas and energy-transition projects?

OF: Absolutely. When you only have six hours of electricity per day, you become very open to any idea that can improve the situation.

The technical potential is huge. Venezuela has ample land, high solar irradiation, and good wind resources. The problem is legal. Under the current electricity law, if you produce more than 10 MW, you are at high risk of being expropriated by Corpoelec. This creates a hard cap that kills large-scale renewable projects.

One of our core objectives in the new reform is to eliminate that 10 MW cap and allow investors to produce as much power as they want and sell it to the grid.

The New Electricity Law Reform: Opening the Sector

VZE: Let’s talk about the upcoming reforms to the Venezuelan electricity law. What do they aim to change?

OF: The draft law [called Ley de Reforma Parcial de la Ley Orgánica del Sistema y Servicio Eléctrico⁴, or Partial Reform of the Electric System and Service], which has already undergone a first reading in the National Assembly, is designed to open the electricity sector to private participation. It’s not just about generation; it includes transmission, distribution, and commercialization.

One of the central ideas is the creation of mixed-ownership companies, or empresas mixtas. Following the oil and gas model, many projects could be structured as 51% government and 49% private investors. This model is envisioned both for parts of the transmission system and for large generation assets, particularly thermoelectric plants.

Another important change is lifting the 10 MW cap. The law intends to remove the arbitrary limit that currently deters serious investors. In effect, the message would become: produce as much electricity as you want, and you can sell it to the grid.

The reform would also open opportunities for localized generation. Oil and gas fields, industrial clusters, cities, and other large consumers could develop generation projects with private capital, easing pressure on the national grid.

VZE: What is delaying final approval of the law?

OF: Procedurally, the law has had its first reading at the National Assembly, the Venezuelan Parliament [a/n: June 2, 2026]. The second and final reading has been delayed primarily because the June 24 earthquakes shifted legislative priorities toward rental laws and humanitarian measures.

There is also the complexity of managing two assemblies—the official assembly in the building and a previous assembly with which there is still political negotiation.

However, pressure to approve the law is intensifying. The White House, specifically the U.S. Secretary of Energy, is pushing hard for approval. There are also many companies and investors eager to enter the Venezuelan electricity business, particularly now that oil and gas majors, including Chevron, are re-engaging in the country and need reliable power.

From all indications, the law is still “in the pipeline” and is expected to be approved in the coming weeks or months, given the urgency.

This conversation has been edited for length and clarity.

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