A key U.S. Congressman believes that the actions by the Organization of Petroleum Exporting Countries (OPEC) regarding oil production could lead to regime change in Venezuela, according to an interview published last week.
“I think ten years from now, we’ll look back at this as a positive effect, possibly on regime change in Venezuela,” said Rep. Jeff Duncan, reacting to OPEC member states failing to agree earlier this month to establish oil output limits.
In the judgment of the Republican legislator from South Carolina, Venezuela lacks sufficient revenues from the production of oil to sustain the government in power. Thus, regime change appears to be less a case of if but of when.
"If Maduro doesn’t have the oil revenues to continue supporting the socialist government… there may be regime change," Duncan said, in reference to the recent spate of mass protests against the regime led by President Nicolás Maduro.
These demonstrations staged by Venezuelans who are irate at the shortages of medicine and food supplies have become increasingly violent over the past week.
The Venezuelan economy has sagged heavily over oil prices that have nosedived from $115 per barrel in June 2014 to less than $30 per barrel by January this year. As a result, the government’s strategy to rely heavily on oil revenues that make up 95 percent of Venezuelan export earnings and roughly 25 percent of its gross domestic product has backfired.
Nevertheless, Oil Minister Eulogio del Pino said that if the price of crude can climb towards $50 per barrel then domestic state-run oil producer PDVSA could prevent defaulting on its growing debt.
Venezuelan officials have pushed for greater action by OPEC to try to place levels on international oil production. The government proposed to the cartel a plan to assign individual counties a range of minimum and maximum oil output. Ultimately the suggestion was scrapped amid the lack of consensus among OPEC members at the recent summit in Vienna, Austria.
Del Pino insisted that he would push his proposal of customized national oil production limits to OPEC member states. He further alleged that Venezuelan oil output has not faltered and is anticipating production to rise up to 2.8 million barrels per day.
That may seem a little too hard to believe following news this week detailing how Venezuela’s oil production plummeted by 120,000 barrels per day in May. Related: Where Does Wall Street See Nuclear Energy Going?
Duncan is a staunch opponent of the Maduro government, and among the accusations made against the government, Duncan blamed Venezuelan security forces for repression against opponents and political dissidents.
Duncan, who is also the chairman for the House of Representatives Foreign Affairs subcommittee on the Western Hemisphere, called into question Venezuela’s close ties to an Iranian regime, including allegations of secret oil deals prior to the removal of international sanctions last January.
Duncan’s remarks over regime change in Venezuela could be interpreted as the ranting of a politico wishing to further his agenda. Certainly other economic and political factors come into play such as the loyalty of Chavistas to Maduro, and an opposition divided over how to pressure the president.
Yet Venezuela’s overall economy cannot improve without a much improved oil sector, which appears to be a weak possibility in the months ahead. And without a solid economy, the odds of Maduro seeing out his presidential term to its completion will get slimmer.
By Erwin Cifuentes for Oilprice.com
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