The doom and gloom forecasts for Venezuela’s oil production are about to get a bit gloomier. And since 95% of Venezuela’s export revenues come from oil, as things get more abysmal for its oil industry, things get more abysmal for the country as a whole.
In today’s Monthly Oil Market Report published by OPEC, according to secondary sources, Venezuela’s production fell by 55,000 barrels per day in March, to 1.488 million bpd. According to the report, Venezuela’s self-reported production fell by a greater amount—77,000 bpd, from 1.586 million bpd in February to 1.509 million bpd in March. Depending on which source information one uses (secondary source vs. direction communication), Venezuela’s production has decreased oil production between 100,000 and 200,000 barrels per day.
This drop in production¬ from the troubled Latin nation—even though it was not just expected but a near certainty—is bound to support higher oil prices, even as the United States continues to offset much of that production, increasing its own production from 10.3 million bpd in the beginning of March to 10.525 million bpd in the beginning of April.
Analyst consensus is that Venezuela is unlikely to pull out of this tailspin. In fact, Venezuela’s position is likely to worsen, with Venezuelan refineries expected to close as crude shortages and underinvestment continue to bite, according to S&P Global Platts.
Venezuela’s production slide has made it the single most compliant OPEC member, at 248%, according to S&P Global Platts figures, who is one of OPEC’s secondary sources for supply data.
On paper, Venezuela boasts proven reserves of 301 billion barrels, although that figure arguably contains oil that cannot reasonably be extracted, and much of it is of a heavy variety that requires finagling with diluents to pump and move through pipelines. But how much oil Venezuela truly has and how much of it is extractable is moot—at least for now—while the country flounders with starving people, a corrupt regime, and failing infrastructure.
By Julianne Geiger for Oilprice.com
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