Gas Pipeline Explosion Cuts Venezuela Oil Production By 30,000 Bpd

A burst natural gas pipeline in Venezuela has forced PDVSA to cut light crude oil production by 30,000 bpd, Reuters has reported, noting that the explosion could also affect the production of the country's most popular heavy grade, Merey 16.

The state oil company uses the light crude to dilute its extra heavy to make it more easily transportable.

A section of the pipeline, which transports associated gas from oil fields to a reinjection plant, exploded last Saturday, with the government blaming the explosion on a terrorist attack.

At the time, Reuters reported that PDVSA was forced to suspend operations at the reinjection plant to stop the fire and assess the damage.

Venezuela produced some 521,000 bpd of crude oil last month, according to the latest OPEC Monthly Oil Market Report. This was down from an average of 796,000 bpd for 2019 but higher than the average for 2020, which was 500,000 bpd.

The government in Caracas has pledged to boost production to as much as 1.5 million bpd this year. To that end, the Maduro regime is even ready to invite back foreign companies and end PDVSA's monopoly of the Venezuelan oil industry.

According to a recent Bloomberg report, managers of foreign oil companies are already discussing their return to the country with the biggest oil reserves in the world.

Venezuela's crude oil and refined product exports plummeted in 2020 to their lowest level in 77 years, as the U.S. continued to step up sanctions against Maduro's regime and anyone found dealing with it. Last year, Venezuela's oil exports plunged by 37.5 percent, reaching just 626,534 barrels per day (bpd)-the lowest level since the early 1940s.

Much of Maduro's turnaround plan depends on the lifting of U.S. sanctions, but the Biden administration has signaled that this would only happen if the government in Caracas takes some major steps towards reconciling its differences with the opposition.

By Charles Kennedy for Oilprice.com

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