So what's with their oil anyway? It's heavy and highly impure, but what do they have to do to make it usable? Do they even have a functional refinery infrastructure any more or did they sell it off like a bunch of crackheads, like they sold off everything else functional?
But if their oil is so shit, why were they making so much money before it all came crashing down?
It is super heavy and full of impurities like sulfur that you have burn off. The impurity content is high enough to makes a noticable difference in barrel output. It also doesn't store well, you have to pump it and refine it ASAP, and your output really tanks if you want to refine high-octane product. Venezuela crude is good for diesel and asphalt. Also because it is shit, you have to tune your refinery to run off Venezuela sludge. I don't remember what you have to do exactly (had a neighbor who worked for a refinery back when Chavez nationalized, and his general opinion was Chavez could fuck off and keep his shit oil), but its dirty and you need to have a crew that knows what they're doing, with the right equipment, or the output is garbage.
Anyway, the reason Venezuela could make money was their retrieval costs are negligible, and they could ship quickly and cheaply directly to the refineries of the #1 oil consumer. Its the worst oil ever, but its near the surface and in nice big deposits, so you don't need to drill a bunch of oil wells. And since the government owns all the land, they don't have to share mineral rights with no scrubs.
Basically low retrieval & shipping production costs.
Placing an oil rig is an expensive endeavor, and whatever you hit, you're going to refine. A lot of the gulf coast rig oil is also pretty shit & high sulfur, but you can't just say "well this sucks, lets go somewhere else" because of what went into drilling the well, so you tune your refinery and you refine it. This meant the US gulf coast had refineries with the right equipment, and crew with the right skill, to refine Venezuela's shit oil.
This skill & equipment gap is a (good part) of why Venezuela can't refine their own oil. Chevron and Texaco
were working on refineries to process Venezuelan crude in-country, but they were having problems that could be surmised as "corruption & unrealistic demands". IIRC the slow progress of hillybilly party loyalists to learn how to be petroleum engineers was one of the excuses Chavez used to nationalize the oil industry. All that shit is now rusting or got looted.
edit: IIRC the gulf coast US refineries don't need to mix Venezuela heavy with anything, but do need to mix extra heavy with lighter oil to refine. Venezuela's refinery infrastructure is not advanced enough to refine the domestic product and have to cut it with lighter oil to make it fluid enough to process; which makes Russia telling them to get fucked even more devastating.
Russia would do some shell games where they would buy (or more specifically by the rights to) a tanker full of light weight crude and/or straight up gasoline, trade that tanker to Venezeula for some of their shit oil and usually some cash, then the Russians would trade the tanker full of Venezuela oil to a US petrolium interest (or possibly to a 3rd part would trade the oil the US refineries).
With the Russian oil oiligarchy cutting them lose, they now have to find partners piecemeal to do the trades with.
