"Venezuela was already finding it extremely difficult before the quota increase," he said. "They just won't be able to produce that much." Despite official statements from PDVSA that it is producing about 3.1mb/d, Voght says that figure is inflated and the actual production is more like 2.5-2.6mb/d.
Venezuela's Opec quota in April was 2.7mb/d.
To reach its new Opec quota, not only would PDVSA have to lift production dramatically by 500,000b/d in the next two months, but also it would have to take into account the 25% natural decline rate in its oil fields, Voght said.
"That's a monumental task for the limited human resources in PDVSA right now," he said. "We're not seeing much work being farmed out to field service companies, so I would say PDVSA's production is stagnant right now."
Opec decided on June 1 to increase global production 2mb/d to 25.5mb/d and another 0.5mb/d starting in August in a bid to curb rising oil prices that reached a record US$42.38 a barrel on June 1.
But Venezuela not producing as much oil as it says it is nor being able to meet its higher quota will keep supply tight and prices high, Voght said.
Venezuela opposed the scale of the Opec increases because it wants to keep oil prices high, but its influence in Opec is waning due to President Hugo Chávez's anti-US stance and the country's diminishing credibility resulting from its inflated production claims. Venezuela has also lost influence at Opec since the departure of Ali Rodríguez - the current president of PDVSA - as head of Opec.
"Venezuela lost its stronghold on Opec when Rodríguez left," Voght said. But even if Opec quota increases cause world prices to fall to US$37/b or lower, Venezuela's oil export income is still high and its economy is "not being weakened all that much because of lower production, given the high oil price scenario," Voght said. "Venezuela doesn't have to produce 3.1mb/d to have sufficient income to run its show."
More worrying than lower prices for Venezuela are its political and structural problems, Voght continued. "We have an unstable political situation right now, but it's not nearly as unstable as it could be, and we have to see where that goes in the next two months." Private investors "are accustomed to what have become the political risk issues in Venezuela," he said, but the real risk of a possible civil uprising is the potential negative impact on PDVSA's operations.
Chávez's opposition has obtained enough signatures for a recall referendum, tentatively scheduled for between August 8 and 15, Voght said, but he estimates the probability of a successful referendum taking place at only about 30%, given the variety of legal options Chávez has at his disposal to delay the referendum. The referendum must take place before August 19 for a regime change to take place, otherwise the constitution says the vice-president would take over as President if the referendum takes place, which means Chávez would be more likely to stay in power, Voght said. "If the referendum doesn't take place before August 19, Chávez is probably pretty secure in his position," he said.
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