Venezuela is looking to shut in some of its still-operational oil wells as oil buyers prove increasingly hard to find at a time when oil demand worldwide is plunging and domestic inventories near capacity, people familiar with the situation in Venezuela's oil sector tell Bloomberg.
Oil production in the Latin American country has slumped over the past three years due to the dire economic situation and the increasing U.S. sanctions on its exports and companies selling Venezuela's oil. Earlier this year, Venezuela managed to achieve a slight increase in its crude oil output, only for the coronavirus pandemic to spread and cause significant demand destruction worldwide, putting more pressure on Nicolas Maduro's regime.
Venezuela's crude oil production plunged to 464,000 barrels per day (bpd) last week, sources with access to production data told Bloomberg. Last week's production dropped by 38 percent from the average output in February.
According to Bloomberg's sources, production at Chevron's joint venture with PdVSA more than halved to around 50,000 bpd last week from 120,000 bpd in January. Petromonagas, a joint venture of PdVSA and Russia's oil giant Rosneft, saw its production last week at 20,000 bpd, just a quarter of what was in January.
At the same time, inventories in Venezuela are piling up, at some 30.9 million barrels, but no one to buy them.
Of the oil Venezuela manages to load on tankers for exports, health inspections on tankers caused a delay to least two cargoes as Venezuela attempts to prevent the spreading of COVID-19, Reuters reported earlier this week, citing an internal document of state oil firm PdVSA that it has seen.
Venezuela's battered economy and oil industry now face the triple threat from low oil prices, plunging global demand, and the spread of the coronavirus. Venezuela has started shutting down gasoline stations across the country as a shortage of fuels has prompted rationing.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More