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Maduro May Sack Oil Minister As Venezuela Sinks

When Nicolas Maduro is inaugurated for a second six-year term in office next month, Venezuela’s president could sack the Oil Minister and CEO at the state oil firm PDVSA, Manuel Quevedo, as a scapegoat for plunging Venezuelan oil production, S&P Global Platts reported on Friday, quoting sources close to the situation.

Quevedo—a National Guard major general with no experience in the oil industry was appointed as the new head of PDVSA and the oil ministry in November 2017, in what Maduro touted as a move to root out corruption from PDVSA and Venezuela’s oil industry. Quevedo’s appointment followed a string of arrests on corruption allegations, with more than 50 PDVSA executives detained as part of the government’s “crusade” on corruption.

Thirteen months under Quevedo’s management later, Venezuela’s oil production slumped to the lowest level in 60 years, and there are no signs that the endemic corruption and mismanagement have been rooted out.

According to OPEC’s secondary sources, Venezuela’s crude oil production continues to plunge—by another 52,000 bpd from October to stand at 1.137 million bpd in November. To compare, Venezuela’s oil production averaged 2.154 million bpd for 2016 and 1.911 million bpd for 2017.

With the economy plunging deeper into double-digit recession and unseen hyperinflation, Maduro faces increased pressure from creditors and now from the tumble in the oil prices, which further cripple Venezuela’s oil export revenues. Oil makes up 98 percent of Venezuelan export revenues.

“Venezuela was barely surviving at $80/b, and we can cross it out at $50/b,” Olivier Jakob, an analyst with consultancy PetroMatrix, told Platts.

According to Platts sources, a leading candidate to replace Quevedo could be Jorge Rodriguez, a close ally of Maduro’s as well as the current minister for communication and information and the brother of current Vice President Delcy Rodriguez. Diosdado Cabello, chairman of Maduro’s Constituent Assembly, is reportedly favoring PDVSA’s vice president of refining, Guillermo Blanco Acosta, for Quevedo’s post, while Jose Vielma Mora and former Central Bank President Nelson Merentes are also rumored to be potential replacements.

Two things may save Quevedo from sacking, according to Platts—the oil minister’s ties with the military and his incoming one-year job as OPEC’s rotating president—a high-profile position in the cartel. 

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By Tsvetana Paraskova for Oilprice.com

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