Venezuela plans to increase its oil production by 65,000 bpd by expanding the output of a joint venture between PDVSA and China’s CNPC, Reuters reports, quoting a statement by President Nicolas Maduro.
The venture, Sinovensa, is 49-percent owned by the Chinese state giant and 51-percent owned by PDVSA. It currently produces 100,000 bpd in the Orinoco belt. The crude is a medium grade of the Orinico superheavy that’s then mixed with light crude to make the Merey blend, which, along with other medium grades, are in high demand among Asian refiners, Reuters notes.
“Thanks always to China, for all of this effort and all of this cooperation,” Maduro said. He added that this will be the first of two production expansions, the second of which should bring production to 230,000 bpd.
In the latest Monthly Oil Market Report, OPEC’s secondary sources—the ones the cartel considers the official production figures—point that Venezuela’s crude oil production in June dropped by 16,000 bpd from May to stand at 734,000 bpd. To compare, Venezuela’s crude oil production in 2017 averaged 1.911 million bpd. According to IHS Markit, this could further fall below 500,000 bpd by 2020.
China, along with Russia, has stuck by Venezuela despite the U.S. sanctions and has continued providing cash to the government in exchange for crude oil. Earlier this week, media reported that a Chinese company would help Venezuela repair its ailing refineries, which have caused a fuel shortage that could shake the Maduro government further if it persists.
Washington’s latest move in the pressure against Venezuela was an executive order of President Trump that ordered the freezing of all assets owned by the Venezuelan government in the United States. A day later, in response to a warning by National Security Advisor John Bolton for China and Russia to stop helping Maduro, China’s Foreign Ministry spokeswoman said Washington should stop “bullying” Venezuela.
"China urges the US to... let the Venezuelan people decide their own future and immediately stop the bullying actions of suppressing other countries at every turn," Hua Chunying said.
By Irina Slav for Oilprice.com
More Top Reads from Oilprice.com:
- Time Is Almost Up For U.S. Shale
- Oil Supply Growth Under Fire From Low Oil Prices
- Japan Is Bargain Hunting As LNG Prices Slump
China and Russia have vested interest in ensuring that Venezuela’s economy remains afloat as they both are owed billions of dollars in loans they extended to Venezuela against oil supplies. They are also determined to undermine US sanctions against Venezuela and also Iran.
The help and support both China and Russia are extending to Venezuela stand in stark contrast to the ugly face of capitalism and imperialism by which the United States is ogling Venezuela’s oil reserves, the world’s largest.
And yet, John Bolton, President Trump’s National Security Adviser, had the temerity and the crudeness to warn China and Russia not to help the legally elected Venezuelan President Maduro to which he got a well-deserved put-down from China telling Washington to stop bullying Venezuela and to let the Venezuelan people decide their own future.
With his plans for regime changing in tatters, John Bolton could do well to withdraw his puppet Juan Guaidó to the United States.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
But I'll have to say that the Trump administration's preoccupation with Venezuela is more than a little curious. Mr. Trump is not so much in the humanitarian vein; I can't see how he looks after the welfare of Venezuelans.
I recall all the dubious history that the U.S. has, south of our border.
I can only hope that Trump's real motivation isn't yet another resource grab. I find it hard to figure out Trump, on this one. As a rule, he's attracted to authoritarian leaders, no matter where they are from. In this instance, we have Maduro, Putin and Xi . . . and Trump. Which authoritarians in this instance look democratic?