Saudi Arabia's Price Increase Could Indicate Oil Price Floor
Juan Guaidó, the Venezuelan opposition leader recognized as the country's interim president by the U.S. and several major European countries, plans to drop the requirement that Venezuela's state oil firm PDVSA hold a majority stake in all joint projects, as the leader looks to boost oil production as soon as possible, Guaidó's envoy to the U.S. has told Bloomberg.
"We want to go to an open economy, we want to increase oil production," Guaidó's U.S. envoy Carlos Vecchio said in an interview with Bloomberg.
"The majority of the oil production that we want to increase will be with the private sector," Vecchio noted.
Under current rules, state firm PDVSA has to hold at least 51 percent in all joint oil projects in the country.
With Nicolas Maduro's government and PDVSA running out of cash, crude oil production in Venezuela-the country sitting on the world's largest oil reserves-has been incessantly falling over the past three years, despite Maduro touting deals with Russia and repeatedly vowing to increase oil production.
The economic collapse adds to years of mismanagement and underinvestment in the oil industry to further complicate attempts in Venezuela, one of OPEC's five founding members, to stop the steep decline of its oil production.
OPEC figures show that Venezuela's crude oil production dropped by another 33,000 bpd from November to just 1.148 million bpd in December, compared to average 1.911 million bpd for 2017.
Earlier this month, Wood Mackenzie analyst Ann-Louise Hittle warned that Venezuela's crude oil production could fall below 1 million bpd after the United States imposed new sanctions on struggling oil firm PDVSA.
"We believe production will likely fall to around 900,000 b/d under pressure from sanctions and a lack of materials for workovers, but we expect waivers will ease the full impact of the sanctions until they expire," Hittle said.
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