Crisis-Hit Venezuela's Oil Output Plummets In 2017 To Decades Low



Crisis-Hit Venezuela's Oil Output Plummets In 2017 To Decades Low
Venezuela's crude oil production fell nearly 13% last year, according to figures released by OPEC.

Reuters

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.


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WHAT DO YOU THINK?


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mario castro  |  January 22, 2018
In early 2012, I left Venezuela along with several other E&P field specialists, hey guys see what happens when the patients take over the asylum.
Tim Albus  |  January 19, 2018
Socialism at its best. Take note you globalist pukes.
Chet  |  January 19, 2018
The author is correct in stating that the production decline is the result of socialist politics and agendas, instead of using part or some of Production income to keep production at least at par, these commies have eaten the "golden goose". Now, the only thing lacking is for the USA to shut down all of the Citgo refineries and retail stores owned by PVDSA and operated in the USA.
Gino Daniel  |  January 19, 2018
What makes communism with a nation that was the most prosperous of South America a few years ago, once out of power will cost many years to recover the level of production that should be producing venezuela with the large proven reserves we have. I hope it's not too late.