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Venezuelan crude oil production falls to lowest level since January 2003 - EIA

Gasoil News - Published on Wed, 22 May 2019

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According to EIA’s May 2019 Short-Term Energy Outlook, in April 2019, Venezuela’s crude oil production averaged 830,000 barrels per day, down from 1.2 million barrels per day at the beginning of the year. This average is the lowest level since January 2003, when a nationwide strike and civil unrest largely brought the operations of Venezuela’s state oil company, Petróleos de Venezuela, SA (PdVSA), to a halt. Widespread power outages, mismanagement of the country’s oil industry, and US sanctions directed at Venezuela’s energy sector and PdVSA have all contributed to the recent declines. Venezuela’s oil production has decreased significantly over the last three years. Production declines accelerated in 2018, decreasing by an average of 33,000 barrels per day each month in 2018, and the rate of decline increased to an average of over 135,000 barrels per day per month in the Q1 of 2019. The number of active oil rigs—an indicator of future oil production—also fell from nearly 70 rigs in the Q1 of 2016 to 24 rigs in the Q1 of 2019. The declines in Venezuelan crude oil production will have limited effects on the United States, as US imports of Venezuelan crude oil have decreased over the last several years. EIA estimates that US crude oil imports from Venezuela in 2018 averaged 505,000 barrels per day and were the lowest since 1989.

EIA expects Venezuela’s crude oil production to continue decreasing in 2019, and declines may accelerate as sanctions-related deadlines pass. These deadlines include provisions that third-party entities using the US financial system stop transactions with PdVSA by April 28 and that US companies, including oil service companies, involved in the oil sector must cease operations in Venezuela by July 27. Venezuela’s chronic shortage of workers across the industry and the departure of US oilfield service companies, among other factors, will contribute to a further decrease in production.

Additionally, US sanctions, as outlined in the January 25, 2019 Executive Order 13857, immediately banned U.S. exports of petroleum products—including unfinished oils that are blended with Venezuela’s heavy crude oil for processing—to Venezuela. The Executive Order also required payments for PdVSA-owned petroleum and petroleum products to be placed into an escrow account inaccessible by the company. Preliminary weekly estimates indicate a significant decline in US crude oil imports from Venezuela in February and March, as without direct access to cash payments, PdVSA had little reason to export crude oil to the United States.

India, China, and some European countries continued to receive Venezuela’s crude oil, according to data published by ClipperData Inc. Venezuela is likely keeping some crude oil cargoes intended for exports in floating storage until it finds buyers for the cargoes.

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Posted By : Rabi Wangkhem on Wed, 22 May 2019
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