Crisis-Hit Venezuela's Oil Output Plummets In 2017 To Decades Low
HOUSTON/CARACAS, Jan 18 (Reuters) - Venezuela's crude oil production fell nearly 13 percent last year, according to figures released by OPEC on Thursday, hitting a 28-year annual low that points to a deepening economic crisis and increased chances of a debt default.
The South American country produced 2.072 million barrels per day (bpd) in 2017 versus 2.373 million bpd the previous year, a nearly 300,000-bpd drop.
That was the biggest decline among the members of the Organization of the Petroleum Exporting Countries that have pledged to restrain production since the start of 2017 through 2018.
But unlike voluntary cuts by Saudi Arabia, Russia and others intended to stoke higher crude prices by draining a global glut, Venezuela has been unable to stop a now six-year-long production decline.
Insufficient investments, payment delays to suppliers, U.S. sanctions, and a brain drain have hammered Venezuela's oil industry. The production fall has hit oil exports – its only major source of foreign currency to repay debt - and refining, creating intermittent fuel scarcity in the country and at some of its main allies, such as Cuba.
An alleged crackdown on oil graft in the last few months, seen by critics as an effort by President Nicolas Maduro to consolidate power, has sown panic across the energy industry and all but paralyzed state oil company PDVSA, according to people at the firm and in the sector.
It is a remarkable downfall for the OPEC member home to the world's biggest crude reserves.
"This is one of the worst collapses in history. It happened without an invasion like in Iraq, the breakup of a country like in the Soviet Union, or a civil war like in Libya," said Francisco Monaldi, a fellow in Latin American Energy Policy from Rice University's Baker Institute.
Venezuela's oil ministry and PDVSA did not respond to a request for comment.
The output drop is likely to worsen a bitter recession and hyperinflation that have poor Venezuelans skipping meals or eating from the garbage.
Opposition politicians say Venezuela's inefficient state-led economic model and rampant corruption are to blame for the oil industry's meltdown.
"This is the most irresponsible act against the Venezuelan people. They destroyed the industry that generates almost 96 percent of the country's foreign revenue," said opposition lawmaker Elias Matta. Socialist Maduro retorts that U.S.-backed opposition supporters have sabotaged the oil sector.
How Low Will It Go?
Venezuela's oil gloom is set to persist this year, with the main question among analysts just how low its production will fall.
Just in December, Venezuela's output sank by 216,000 bpd from November to 1.621 million bpd, the OPEC figures showed, a 29-percent drop from December 2016 levels.
12
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Rystad Looks at the Buzz Around White Hydrogen
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension