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Venezuela’s Oil Production Continues To Plummet

Venezuela’s Oil Production Continues To Plummet

Venezuela’s crude oil production tumbled…

Oil Glut At Sea Starts To Shrink

Oil Glut At Sea Starts To Shrink

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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Chinese-Venezuelan Joint Venture Doubles Oil Production

A joint venture between troubled Venezuelan state oil company PDVSA and China’s CNPC in the South American country has doubled its oil production in the past seven months, Reuters reported today, quoting a unit of PDVSA, CVP.

The joint venture, Sinovensa, accounts for about a tenth of Venezuela’s oil production, which has been falling inexorably over the past few years under the triple burden of the oil price collapse, years of mismanagement and corruption, and U.S. sanctions.

CVP said in a Facebook post production at the Sinovensa project, in the Orinoco belt, totaled 130,000 bpd to date. That’s up from just 69,400 bpd in April. The project is the second-largest that involves a foreign company.

This particular foreign company has been expanding its share in Sinovensa, as well. In September, PDVSA sold CNPC an additional 9.9 percent in the project, which gave the Chinese company a stake of 49 percent. That’s the highest portion of foreign participation in a Venezuelan project, according to Reuters, as of end-2017.

China is Venezuela’s biggest creditor, having provided US$50 billion in loans already. Venezuela has undertaken to repay these with crude oil supplies but has struggled to fulfill its commitments because of falling production and lack of financial means to reverse the fall.

In November, Venezuela pumped 1.46 million bpd of oil, a slight increase from the 1.43 million bpd recorded for October but down from over 2 million bpd last year. To add to the country’s oil woes, PDVSA has seen a veritable exodus of qualified personnel, workers’ protests and increased crime activity at oilfields.

However, an analyst interviewed by Reuters believes the output increase at Sinovensa is a temporary thing. “They are managing to recover so-called ‘deferred output’ which they had lost due to issues like equipment theft,” Antero Alvarado from Gas Energy Latin America, said. “But this will have a short-term impact because output will fall again and they will need to drill more wells.”

By Irina Slav for Oilprice.com

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  • Vishwas on December 14 2018 said:
    It is probably hedge funds or vested interest undermining Venezuela oil production projections. China is too eager to get max oil from Venezuela. Hence it went in JV and now succeeding. I'll not be surprised if Venezuela oil production doubles by the end of 2019. A major factor influencing oil prices.
  • Bill Simpson on December 14 2018 said:
    The Chinese are going to have to pump a lot of oil in order to get their $50 billion loan back. And the economy down there can only go in one direction - down.
  • Dan on December 23 2018 said:
    Since its heavy crude, needed to mix with light crude, a major import for China, I expect this crude has a one way ticket to China and Silk Road oil products exports. After watching the YouTube video of a Chinese auto show with endless global brands and endless copy cat brands that are much cheaper it dawns on the viewer, ' we can't compete with that". If the 1 billion Chinese and 1 billion Indians would learn to get along and trade using a gold backed currency they would be unstoppable. They reason I mention gold is of course the hyperinflation rate in Venezuela . The economy in Venezuela should pick up as China takes more control of the economy which in essence is oil. Heavy crude is needed and Venezuela has it.

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