Venezuela - one of the OPEC deal’s staunchest promoters and supporters – produces around 500,000 barrels per day of heavy oil, and this figure has been left out of the agreement, Venezuelan oil minister Eulogio del Pino told Russia’s TASS news agency on Wednesday.
As part of the OPEC deal reached last week, Venezuela is pledging to cut 95,000 bpd from its production level - as OPEC named it a ‘reference production level’ - of 2.067 million bpd.
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Now Venezuela’s oil minister admitted there are some difficulties in estimating each OPEC member’s production and reference output level based on the so-called secondary sources.
“We are in favor of taking these sources into account. For us, this question concerns oil production in the oil belt of the Orinoco River, which has heavy oil that needs to be upgraded through special capacities - around 500,000 barrels that are not included in the agreement,” TASS quoted Del Pino as saying.
For the end of 2016, Venezuela’s “overall outlook” for production is 2.55-2.6 million bpd, while according to secondary sources it’s around 2 million bpd, Del Pino noted.
According to the latest available OPEC report on members’ output, figures for October show that according to OPEC’s secondary sources, Venezuela’s output was 2.067 million bpd—that’s the same figure OPEC used as reference output in hammering out the details of last week’s deal. According to direct communication from the countries, Venezuela itself reported to OPEC production of 2.316 million bpd. That’s almost 250,000 bpd difference.
Venezuela’s oil production has been falling steadily this year, and its state oil company PDVSA barely escaped default less than two months ago. Its economy is in disarray, inflation is rampant, foreign exchange reserves are dwindling, and debts are piling up. President Nicolas Maduro is tightening his grip over the country, and it’s hard to predict how long he will cling to power. One thing is certain, though: Venezuela desperately needs higher oil prices.
By Tsvetana Paraskova for Oilprice.com
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